Jarvis v. State Bank of Ft. Morgan

• Decision Date: 16 March 1896
• Citation: 45 P. 505,22 Colo. 309
• Parties: JARVIS et al. v. STATE BANK OF FT. MORGAN et al.
• Court: Colorado Supreme Court

45 P. 505

22 Colo. 309

JARVIS et al. v. STATE BANK OF FT. MORGAN et al.

Supreme Court of Colorado

March 16, 1896

Appeal from district court, Morgan county.

Two actions, consolidated and tried together,--one by the State Bank of Ft. Morgan against Samuel M. Jarvis, trustee, the Bijou Reservoir & Canal Company, the Jarvis-Conklin Mortgage Trust Company, and one Beardsley, and the other by the Clark-Brown Mercantile Company against the same defendants,--to establish and enforce mechanics' liens. There was a default by all defendants except the trust company, Jarvis, trustee, and Beardsley, and the consolidated case was tried to the court without a jury. From a decree in favor of plaintiffs, the last-named defendants appeal. Affirmed.

In the year 1889 the Bijou Reservoir & Canal Company was incorporated under the general incorporation laws of this state for the purpose of building an irrigating canal in the counties of Morgan and Weld. In the month of July of that year it duly filed, in the office of the county clerk of the respective counties, its map and survey, showing the general route of the canal, and the statement required by section 1720 of the General Statutes of 1883 and the amendments thereto. See Sess. Laws 1887, p. 314. Thereupon it proceeded with the construction and completion of the canal. In the month of August, 1889, being in need of funds to pay certain indebtedness and to complete the canal, this canal company borrowed of the Jarvis-Conklin Mortgage Trust Company the sum of $40,000, evidenced by bonds of the mortgagor, and to secure their payment executed a deed of trust to Samuel M Jarvis as trustee. This deed of trust included all of the property of the canal company which it then owned, all of its rights and franchises, and all and singular the canal or canals, ditches, flumes, reservoirs, etc., which thereafter the canal company might acquire, whether the same were then or thereafter to be, constructed. Afterwards, and in the month of February, 1890, the canal company entered into a contract with one A. S. Baker for the completion of its canal, and the building of a flume across Kiowa creek, which contract contains the following words: 'The contractor party of the second part, hereby further agrees to waive and release, and hereby does waive and release, to said company all rights and claims of liens in any manner growing out of this agreement, or in any manner accruing against said canal property, and every part thereof; and said contractor further agrees to warrant and defend said company against any and all liens and claims against the property of said company accruing or to accrue in favor of all contractors or subcontractors, material men and laborers, for work and for material furnished to, in, and through the said contractor for the use and benefit of said construction.' Other provisions pertinent to the present inquiry are: 'And the said company, party of the first part, hereby agrees to pay, or cause to be paid, to the said contractor, in full for the work hereinbefore provided to be done, the whole sum of $15,500, the said sum to be paid at the times and in the manner following; that is to say: (1) All bills for lumber, hardware, and other material and supplies, together with freight added, upon presentation of original bills of purchase and freight bills; the same to be charged to said contractor on account of the aforesaid contract price. (2) All labor bills upon presentation of certified pay roll with checks drawn to the order of payee, for which receipt in full shall be indorsed upon said pay roll at the time of payment; such payments to be made on the first day of each month on account of work done during the month next preceding; such amounts also to be charged to contractor on account of contract price. (3) The balance of said contract price shall be paid to said contractor upon completion and acceptance of work by the said company, and the full discharge of all claims by any and every person whomsoever on account of doing work or furnishing material for the use and benefit of said construction and contract.' In the month of April, 1890, A. S. Baker sublet to his brother, F. E. Baker, the contract for building this flume, which in due course of time F. E. Baker finished, and the work was accepted by the canal company. This flume is on section 14, title to which then was, and still is, in the United States government, and the only interest in the land which the canal owner has is such as was obtained for a right of way by compliance with the laws of this state and the United States, referred to in the opinion. The Clark-Brown Mercantile Company furnished lumber and material to the subcontractor for this flume, and afterwards, in due course of time, and in accordance with the mechanics' lien statute of this state, the subcontractors duly filed their liens upon default in the payment of the amounts due for the work done and material furnished. The canal company subsequently making default in the payment of this indebtedness to the trust company, the trust deed securing the same was duly foreclosed, and a sale of all its property, including this flume, and all of its canal on section 14, was made, and the property was bid in by one Beardsley, who was acting as agent for the trust company, the owner of all the bonds. F. E. Baker assigned his claim and his rights thereunder to the State Bank of Ft. Morgan, and to foreclose these liens the bank and the mercantile company, after the foreclosure under the deed of trust, brought separate suits in the district court of Morgan county, which, by consent of parties, were consolidated for trial. All of the defendants suffered default except the trust company, the trustee under the trust deed, and Beardsley, the purchaser at the sale under the foreclosure. The case, as thus consolidated, was tried to the court without a jury, which, although making no specific findings of fact, found, generally, all the issues in favor of the plaintiffs, and rendered judgment against the canal company in favor of appellees for the amount of their claims, and made these judgments a lien upon that portion of the canal upon which the work was done for which the liens were claimed, and made them prior to the lien of the trust deed, and prior to the rights of Beardsley, the purchaser under the foreclosure sale; from which decree the trust company, Beardsley, and Jarvis, as trustee, appeal to this court. Such additional facts as throw light upon the controversy, together with a statement of the contentions of the respective parties, are sufficiently set out in the opinion.

Beardsley & Gregory and Teller, Orahood & Morgan, for appellants.

Rogers, Shafroth & Walling and W. A. Hill, for appellees.

J. W. McCreery and Ira J. Bloomfield, amici curiae.

CAMPBELL J. (after stating the facts).

From the foregoing statement it will be seen that the controversy here is between a purchaser under the foreclosure of a trust deed containing a provision covering subsequently acquired property and those claiming liens under the mechanic's lien statute of the state, whose rights accrued after the recording of the prior trust deed, on account of labor performed and materials furnished, which were wrought into, and, thus combined, brought into being, such property. The contractor makes no defense, and the only question involved is the relative priority of the trust deed and of the mechanics' liens.

The first position of the appellants is that the right of way upon which this flume was built became vested in the canal company when the latter filed its map, etc., in July, 1889. This right of way, it is said, was in esse, and covered by the trust deed, long before the lien of the appellees attached. The argument is that under the act of congress of July 26, 1866 (Rev. St. U.S. §§ 2339, 2340), this right of way, being over government land, was confirmed to the canal company 'as the same is recognized and acknowledged by the local customs, laws,' etc.; citing Jennison v. Kirk 98 U.S. 453, Broder v. Water Co., 101 U.S. 274, and other similar cases. By section 1720, Gen. St. 1883, as amended in 1887 (see Sess. Laws 1887, p. 314), relating to the rights of those who build ditches and canals and appropriate waters of natural streams for purposes of irrigation, it is provided that the 'priority of right of way, and water accordingly, shall date from the day named as the day of commencing work, otherwise only from the date of the filing of the same'; that is, from the day of filing the map, statement, etc. Hence it is said this right of way became vested, as against the government, the owner of the servient land, from the day when the map, etc., were filed. This we regard as not a correct construction of the statute. The priority given, both as to the right of way and the water, is as against other claimants of ditches and canals and appropriators of water from the same source of supply. The language is general, and is as applicable to a private individual as to the federal government over whose lands the ditch is built. But we apprehend it would not be contended that a right of way over the lands of a private individual, acquired by a canal owner for conveying water in his canal, became vested and fixed from the time of beginning work on the canal, but only...