Lingle Water Users' Assn. v. Occidental Building & Loan Assn

Decision Date31 March 1931
Docket Number1662
Citation43 Wyo. 41,297 P. 385
PartiesLINGLE WATER USERS' ASSN. v. OCCIDENTAL BUILDING & LOAN ASSN
CourtWyoming Supreme Court

APPEAL from District Court, Goshen County; CYRUS O. BROWN, Judge.

Action by Lingle Water Users' Association against Occidental Building & Loan Association. Judgment for plaintiff, and defendant appeals.

Reversed and Remanded.

For the appellant there was a brief and a reply brief by T. F. Wiles of Omaha, Nebraska, John L. Sawyer, of Torrington, Wyoming and Burt Griggs, of Buffalo, Wyoming, and oral argument by Mr. Griggs.

Appellant cannot be held for a personal liability in this case for the following reasons. First: There was no assignment or transfer of the beneficial interest of the Platte Valley Farms Company. Second: A pledgee of corporate stock cannot be held liable as a stockholder. Third: Appellant did not assume personal liability for assessments against the stock owned by the Platte Valley Farms Company. Fourth: No separate note or bond was given. Fifth: Respondent has designated its own remedy in case of default in payments of assessments by which it is bound. There is no privity of contract between plaintiff and defendant. If McKinnon was trustee of the Platte Valley Farms Company, he had no right to assign the certificates to defendant association. Perry on Trusts, Sec 517 (5th Ed.) Snyder v. Collier, 123 N.W. 1023. The subscription contracts and stock certificates were assigned as collateral security and assignee assumed no liability as a stockholder. 5066 C. S. Johnson v. Black, (Wash.) 109 P. 367; Burgess v. Seligman, 107 U.S. 20. One purchasing property subject to a debt is not liable for the debt. Andrews v. Robertson, (Calif.) 170 P. 1129. Jones on Mortgages, Vol. 2, Sec. 1712; Bailey v. State, (Okla.) 179 P. 615; McArthur v. Goodwin, (Calif.) 160 P. 679; Morrison v. Bank, (Mont.) 225 P. 123; Crane v. Hughes, (Kas.) 48 P. 865; 2 Jones Mtgs., Secs. 933, 939; Crebbin v. Shinn, (Colo.) 74 P. 795. Unless the mortgage indebtedness be expressly assumed; 3 Jones Mtgs. 728; Starbird v. Cranston, (Colo.) 48 P. 652; Lloyd v. Lowe, (Colo.) 165 P. 609. There is no implied covenant to pay a mortgage debt. 4645 C. S. 2 Jones Mtgs. 837-838. Plaintiff designated his own remedy, and is bound thereby. See subscription agreement, paragraph 6. There is no privity of contract running with the land. Lisenby v. Newton, (Calif.) 52 P. 813, 11 Cyc. 1081; Glenn v. Canby, 24 Md. 127; Beardsley v. Stephens, 273 P. 243; Sterrett v. Trust Co., 282 P. 290; 2 Jones, Sec. 965, 7 R. C. L. 1100; Hurxthal v. Co., (W. Va.) 44 S.E. 520; Clement v. Willett, (Minn.) 117 N.W. 491; Fresno Canal Co. v. Rowell, (Calif.) 22 P. 53. An expression in a contract that the agreement to pay assessments is a covenant running with the land, means that the land itself is bound, and that the lien may be foreclosed, irrespective of the ownership of the land, but it does not mean that a personal liability is created in every assignee, or grantee, in the chain of title, especially where an assignment is taken as collateral.

For the respondent there was a brief by Reid & More, of Torrington, Wyoming, and oral argument by Mr. Reid.

Platte Valley Farms Company held certificates for water rights which were liens upon lands; it borrowed money from defendant, and assigned certificates of purchase as collateral security; also subscriptions for certain certificates of stock in Lingle Water Users' Association, upon which there was unpaid assessments. Defendant took possession of the lands and this action is to recover delinquent assessments from defendant. In Wyoming a separate trust may be established by parol evidence. 39 Cyc. 81. Harvey v. Gardner, 41 O. S. 642; Hall v. Livingston, 3 Del. Ch. 348; Foy v. Foy, 3 N.C. 31; Mead v. Randolph, 8 Tex. 191; Osterman v. Baldwin, 18 L.Ed. 730. Defendant is not a pledgee and is personally liable on covenants running with the land. Crawford Co. v. Hathaway, (Nebr.) 93 N.W. 781. The contracts contain an express covenant for the payment of purchase price, therefore Section 4645 C. S. does not apply. Plaintiff's remedies are cumulative. There is a privity of contract between plaintiff and defendant. Masury v. Southworth, 9 O. S. 341. The contract was a covenant running with the land. 15 C. J. 1252; Muskogee v. Mills, (Ga.) 7 L. R. A. (N. S.) 1130; Stevens v. Co., (Mo.) 73 S.W. 505; Raby v. Reeves, (N. C.) 16 S.E. 760; Barron v. Whiteside, (Md.) 43 A. 825; Middlefield v. Co., (Mass.) 35 N.E. 780; Martin v. Martin, (Kan.) 24 P. 418; Indiana Co. v. Harper, 98 N.E. 743; Murphy v. Kerr, 5 F.2d 908; Oregon Co. v. Strang, (Ore.) 260 P. 1002; Shaffer v. George, 171 P. 881; Lincoln Co. v. Crausel, (Wis.) 224 N.W. 98, 41 A. L. R. 1363; Howard Co. v. Co., 53 Ga. 689, 51 A. L. R. 1326.

As amica curia there was a brief by Edward F. Dougherty and Byron B. Oberst, of Omaha, and oral argument by Mr. Oberst.

An agreement by a stockholder in an irrigation company to pay yearly assessments for water furnished to irrigate his land is a personal covenant, regardless of the wording of such agreement. Fresno Canal & Irrig. Co. v. Rowell, 80 Cal. 114, 22 P. 53; Fresno Canal & Irrig. Co. v. Dunbar, 80 Cal. 530, 22 P. 275; Pomona Land & Water Co. v. San Antonio Water Co., 152 Cal. 618, 93 P. 881; California Pkg. Corp. v. Grove, (Cal.) 196 P. 891; Farmers & Merchants Irrig. Co. v. Hill, 90 Neb. 847, 134 N.W. 929; Skinner v. Scholes, (N. Dak.) 229 N.W. 114; Consol. Ariz. Smelting Co. v. Hinchman, 212 F. 813. The remedy of the irrigation company is by foreclosure of the lien, expressly conferred on it by the Articles of Incorporation and by the Statutes. Fruitland Irrig. Co. v. Thayer, (Wash.) 160 P. 1048; Adams, et al. v. Twin Falls-Oakley Land & Water Co., (Idaho) 161 P. 322; Reynolds v. North Side Canal Co., (Idaho) 213 P. 344; Seaman v. Big Horn Canal Ass'n., (Wyo.) 213 P. 938; Lakeview Canal Co. v. R. Hardesty Mfg. Co., (Wyo.) 224 P. 853; State ex rel. Avenius v. Tidball, (Wyo.) 252 P. 499. It is against public policy to hold personally liable, a subsequent purchaser, who has not assumed and agreed to pay the unpaid installments and yearly assessments. 50 C. J. 858; Goodyear v. Brown, 155 Pa. 514, 26 A. 665, 20 L. R. A. 838; Arms v. Denton, 212 Ky. 43, 278 S.W. 158; Maryland Trust Co. v. Nat'l. Mechanics Bank, 102 Md. 608, 63 A. 70. The vendor in an executory contract cannot recover a personal judgment for the balance of the unpaid purchase price, against an assignee of the vendee, unless such vendee expressly assumed the contract obligations. Lisenby v. Newton, 120 Cal. 571, 52 P. 813, 39 Cyc. 1671; Bimrose v. Matthews, (Wash.) 138 P. 319; Southern P. Co. v. Butterfield, (Nev.) 154 P. 932; Beazley v. Embree, (Cal.) 183 P. 298; Trapey v. Curran, (Cal.) 228 P. 62. An assignment made by a vendee in an executory contract for the sale of real estate made to secure the payment of money is in effect a mortgage of the vendee's interest in the real estate described in such contract. Lipp v. So. Omaha Land Syndicate, 24 Neb. 692, 40 N.W. 129; Scharman v. Scharman, 38 Neb. 39, 56 N.W. 704; Burrows v. Hoveland, 40 Neb. 464, 58 N.W. 947.

BLUME, Justice. KIMBALL, Ch. J., and RINER, J., concur.

OPINION

BLUME, Justice.

The Lingle Water Users Association is a corporation of this state, organized in 1916 for the purpose of purchasing, acquiring, furnishing and distributing an adequate supply of water for irrigation to its share-holders. The lands of most of these share-holders were, it seems, originally reclaimed under the so-called Carey Act, (43 U.S.C. A., Sec. 641 et seq.) and appurtenant thereto was a ditch right in what is now called the Interstate Canal. The waters originally appropriated were, apparently, not sufficient. An additional supply was able to be procured from the Pathfinder Reservoir, owned by the United States, pursuant to the so-called Warren Act of February 11, 1911, (Sec. 523, Sec. 1, 43 U.S. C.), which act forbids any association acquiring such additional supply from making any profit. The Association, in its certificate of incorporation, was authorized to purchase such additional water right. It was further provided therein that all shares and all rights should become appurtenant to the lands for which the water was furnished; that the association might make assessments for amounts unpaid on shares and for operation, maintenance, repair and improvements; that such assessments should be a lien on the land for which, together with penalties and interest, the latter might be sold. The certificates for shares issued were made subject to the provisions of the articles of incorporation. On application of the Platte Valley Farms Company, hereinafter called the purchaser, the Association bought a supply of water from the Pathfinder Reservoir for the Northeast Quarter of Section 36 and the Northwest Quarter of Section 31, T. 25, R. 61, and on June 10, 1922, conveyed this right to the purchaser subject to the contract with the United States. The purchaser agreed therein to pay for such rights the sum of $ 1220 and $ 1070 respectively, ten per cent of which was paid down and the balance was made payable in annual installments of varying amounts, the last installment becoming due on or before April 1, 1931. Section 12 of these contracts is as follows:

"Art 12. It is understood and agreed that the terms of this contract shall inure to the benefit and be binding upon the heirs, executors, administrators, successors and assigns of the parties to this instrument, and in order to more effectually accomplish this, it is hereby agreed by and between the parties hereto that this instrument shall be deemed a covenant running with the land to which the water right hereby contracted for is appurtenant, and the successors in...

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