North Side Canal Co., Ltd., a Corp. v. Idaho Farm Co.

Decision Date26 October 1939
Docket Number6721
Citation96 P.2d 232,60 Idaho 748
PartiesNORTH SIDE CANAL COMPANY, LIMITED, a Corporation, v. IDAHO FARMS COMPANY, Respondent
CourtIdaho Supreme Court

WATER AND WATER COURSES-CAREY ACT-CONSTRUCTION LIEN-MAINTENANCE LIEN-PRIORITY.

1. Questions which merely lurk in the record, and which are neither brought to the attention of court nor ruled on, are not to be considered as having been decided so as to constitute precedents.

2. The statute allowing maintenance assessments by operating company on lands purchased by Carey Act construction company, on foreclosure of its lien for construction costs, is not unconstitutional as impairing obligation of construction company's contract for full reimbursement for construction costs, where construction company by statute was limited in default of payment of its costs, to sale of lands and water and recovery of whatever sum was paid at sale. (I C. A., sec. 41-1726; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

3. The liens of a Carey Act operating company on land and water rights for maintenance costs were not merged because construction company obtained title to the land by foreclosure proceedings, where liens of operating company were asserted only after successor of construction company had acquired title by foreclosure proceedings. (Carey Act, 43 U.S. C. A., sec. 641 et seq.; I. C. A., secs 41-1728 to 41-1735.)

4. A Carey Act operating company is not prevented from foreclosing liens for maintenance assessments on land of Carey Act construction company obtained by foreclosure of its lien for construction costs because of fact that the statute does not limit the lien of construction company for construction costs to time of foreclosure, but gives one until payment, since payment, in case of default is under the statutes accomplished by foreclosure or deed in lieu thereof. (I. C A., secs. 41-1728 to 41-1735; Carey Act, 43 U.S. C. A., sec 641 et seq.).

5. A Carey Act construction company after the foreclosure of its lien on land, for failure of entryman to pay contract price, does not hold land as a construction or selling agent of the state in view of statute disclaiming any liability on part of state for a Carey Act construction project. (I. C. A., sec. 41-1712; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

6. A Carey Act construction company was required to pay maintenance assessments on repossessed lands obtained after failure of entryman to pay contract price, although land was almost valueless and no water had been used on it. (I. C. A., secs. 41-1701 to 41-2109; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

7. A Carey Act construction company on obtaining title to land by foreclosing its lien for construction costs is not prohibited from selling the land at an increased price over original price. (I. C. A., sec. 41-1735; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

8. The statutes compelling a Carey Act construction company to sell its water rights within a certain time limit do not apply after purchase of land at foreclosure or by deed. (I. C. A., sec. 41-1735; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

9. Before original sale of land and water rights, a Carey Act construction company can be compelled by mandamus to sell water rights, but when all water available has been sold, no further sales of water rights can be compelled. (I. C. A., sec. 41-1735; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

10. Where a Carey Act construction company has obtained title to land by foreclosure of its lien for construction costs, such company cannot be compelled to sell the foreclosed land and water. (I. C. A., sec. 41-1735; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

11. Where a Carey Act construction company has obtained title to land and water rights by foreclosure of its lien for construction costs, transfer of place of use of water owned by construction company would be governed by same rules applicable to any other water user. (I. C. A., sec. 41-1735; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

12. Land and water rights obtained by a Carey Act construction company on foreclosure of its lien for construction costs are subject to maintenance assessments by Carey Act operating company and operating company is entitled to foreclose its lien on such land for maintenance assessments. (I. C. A., secs. 41-1701 to 41-2109; Carey Act, 43 U.S. C. A, sec. 641 et seq.).

13. A Carey Act operating company was not estopped from claiming liens for maintenance assessments on land and water rights purchased by construction company at foreclosure sale because of fact that after construction and operating companies had agreed to abide by any decision of United States' courts determining priority of liens of parties, United States Supreme Court rendered a decision allegedly adverse to operating company, where both parties to contract by their subsequent actions indicated that they had ceased to rely on contract. (I. C. A., secs. 41-1701 to 41-2109; Carey Act, 43 U.S. C. A., sec. 641 et seq.).

APPEAL from the District Court of the Eleventh Judicial District, for Jerome County. Hon. Guy Stevens, Presiding Judge.

Appellant, a Carey Act operating company, brought suit to foreclose its lien for operation and maintenance assessments on lands and appurtenant water rights held by respondent, successor to the construction company and its bondholders. Judgment for defendant. Reversed.

Reversed and remanded with instructions.

Wayne A. Barclay, Frank L. Stephan, J. H. Blandford and Richards & Haga, for Appellant.

The decision of the United States Supreme Court in Port-neuf-Marsh Valley Canal Co. v. Brown, 274 U.S. 630, 47 S.Ct. 692, 71 L.Ed. 1243, rests upon different facts and does not involve section 41-1901, upon which appellant's lien is based; hence, that decision is neither controlling nor persuasive. That decision did not involve assessments levied against the land and water. The assessments there involved were levied under the general corporation law by a corporation against its own stock. The lien was on the shares of stock evidenced by the stock certificate; it was not against the land. The construction which the court placed on section 41-1726 was contrary to the construction placed on it by this court; what the court said about section 41-1901, et seq., was clearly obiter dictum.

That an irrigation company shall have a prior lien on land for water service, has been the established policy in the state of Idaho for over forty years. Section 41-806 (adopted 1895) applies to Carey Act projects such as appellant's ( Adams v. Twin Falls-Oakley Land & Water Co., 29 Idaho 357, 161 P. 322; Blaine County Canal Co. v. Hansen, 49 Idaho 649, 292 P. 240.)

Section 41-1901 expressly declares that appellant's lien shall be "a first and prior lien, except as to the lien of taxes, upon the land to which such water and water rights are appurtenant," and that is the construction that has been given to this statute by this court. (Carlson-Lusk Hdwe. Co. v. Kammann, 39 Idaho 654, 229 P. 85.)

This court has expressly held that section 41-1901 does not impair the obligation of contract, although it gives liens created thereunder priority over mortgages executed prior to the assessment. (Federal Land Bank v. Bissonnette, 51 Idaho 219, 4 P.2d 364; Sanderson v. Salmon River Canal Co., 45 Idaho 244, 263 P. 32.)

The respondent's interest or lien under section 41-1726 is, by express provision of the statute, limited to priority over liens "created or attempted to be created by the owner and possessor of said land," and that is the construction that has been placed on this statute by this court. (Continental & Commercial Trust & Sav. Bank v. Werner, 36 Idaho 601, 602, 215 P. 458.)

When respondent foreclosed its lien for default by settler in payment of the purchase price, it bid in the land and water rights at foreclosure sale for the amount due it. It seems obvious that that extinguished the debt and ipso facto, discharged the lien securing the same. (Henson v. Henson, 151 Tenn. 137, 268 S.W. 378, 37 A. L. R. 1131, 1136; 2 Jones on Mortgages, 8th ed., sec. 950; Shaner v. Rathdrum State Bank, 29 Idaho 576, 161 P. 90; 41 C. J., p. 776; 10 R. C. L., p. 666.)

Edwin Snow and A. F. James, for Respondent.

A Carey Act construction company is a trustee; a state selling agency, having only a lien for construction costs-- not a speculative land company for profit. (State v. Twin Falls etc. Co., 30 Idaho 41, 166 P. 220; Adams v. Twin Falls-Oakley Land & Water Co., 29 Idaho 357, 161 P. 322; Idaho Irr. Co. v. Lincoln County, 28 Idaho 98, 152 P. 1058.)

It is bound at all times by the state contracts to sell water rights in the system it constructs--so long as it has any such property.

For the construction costs and reasonable interest, and only that, it is given a prior lien on the water rights and lands reclaimed thereby. (Carey Act, sec. 642, Tit. 43, U.S.C. A.; secs. 41-806, 41-1726, I. C. A. (see full original text, Laws 1895, sec. 215).)

The construction lien is at all times prior to lien for maintenance; an uncompleted sale to a first settler neither extinguishes the construction lien nor the obligation of the construction company to re-sell the property. ( Portneuf-Marsh Valley Canal Co. v. Brown, 274 U.S. 630, 47 S.Ct. 692, 71 L.Ed. 1243, referred to as the "Portneuf Case"; Idaho Farms Co. v. North Side Canal Co., Ltd., 24 F.Supp. 189.)

The construction lien antedates the water right contracts with the settler; it arises out of the federal and state statutes, the state contract and the reclamation of the land. ( Columbia Trust Co. v. Eikelberger, 42 Idaho 90, 105, 245 P. 78.)

Foreclosure of the settler's water contract merely extinguishes the settler's interest in the property; it...

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    • United States
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