STORRIE PROJECT WATER USERS ASS'N v. GONZALES

• Citation: 209 P.2d 530,53 N.M. 421
• Decision Date: 01 September 1949
• Docket Number: No. 5091,5091
• Parties: STORRIE PROJECT WATER USERS ASS'N v. GONZALES et al. (STATE TAX COMMISSION, Intervenor).
• Court: Supreme Court of New Mexico

53 N.M. 421

209 P.2d 530

STORRIE PROJECT WATER USERS ASS'N

v.GONZALES et al. (STATE TAX COMMISSION, Intervenor).

No. 5091.

Supreme Court of New Mexico.

Sept. 1, 1949.

[209 P.2d 530, 53 N.M. 422]

E. P. Ripley, Santa Fe, for intervenor for appellant State Tax commission.

Noble & Spiess, Las Vegas, for appellee.

SADLER, Justice.

The question presented for decision is whether the earthen dam, impounding the waters of Storrie Lake, or reservoir, title to which is in Storrie Project Water UsersAssociation, a non-profit corporation organized under 1941 Comp. §§ 77-1601 to 77-1609, as the administrative agency to maintain and operate an irrigation system for supplying water for the mutual advantage of its shareholders in the irrigation of their lands, is assessable separate and apart from the lands to which the water is appurtenant.

The judgment sought to be reviewed in the particular mentioned was rendered by the district court of San Miguel County in a suit for a declaratory judgment brought by the appellee, Storrie Project Water Users Ass'n., a corporation, as plaintiff, against Fidencia Gonzales, Assessor, and Manuel J. Baca, Treasurer, of San Miguel County, as defendants, in which State Tax Commission was granted leave to intervene, all appearing in this court as appellants. The nature of the lower court's views on the matter presented may best be disclosed by quoting the adjudicating portions of its judgment, as follows:

'It Is, Therefore, Ordered, Adjudged And Decreed that neither the dam, the dam site, reservoir, reservoir site, ditches or canals are subject to assessment for taxation separate and apart from the irrigated lands to which such water, water rights, dams, reservoirs, ditches, canals and headgates are appurtenant.

'It Is Further Ordered, Adjudged And Decreed that the situs of the dam, reservoir, canals, ditches and headgates for the purpose of taxation is the situs of the land to which the water impounded thereby or therein is appurtenant, and that such water and water rights, dams, reservoirs, ditches, canals, headgates and irrigation system is an element which was and should be considered in fixing the value of the lands to which said water or water rights are applied and are appurtenant.'

The adjudications made were based on findings incorporated in the trial court's decision previously filed. From them it appears that Storrie Project Water Users Ass'n., the plaintiff below, is a non-profit corporation organized under 1941 Comp. §§ 77-1601 to 77-1609. Each landowner is given a share of stock in the association for each acre of irrigated land owned by him. The plaintiff corporation, sometimes called the Water Users Association, is a mutual association organized to acquire, maintain and operate diversion dams, intake canals, storage reservoirs, dams, irrigating canals,ditches, flumes and irrigation works for the mutual benefit of its shareholders and for the sole purpose of distributing water for the irrigation of lands owned by them.

The Water Users Association distributes the water impounded pro rata to its stockholders, who use it exclusively for irrigating their lands. No water is sold for any other purpose. The Water Users Association is purely a mutual reservoir company, in which the capital stock stands for and represents the consumer's interest in the reservoir, dams, canals and water rights. The sole benefit derived from owning stock in the association is the exclusive right to the use of the water it represents. The only water received for the irrigation of these lands is that impounded in said reservoir by said dam. The only use to which said water is put is the irrigation of said lands to which said water is appurtenant and no water or water rights are sold. No dividend can ever be declared. The only revenues received by plaintiff are from pro rata assessment imposed upon its stockholders, the proceeds and receipts of which are used exclusively for the repair, maintenance and cost of operation of said irrigation system. The association has no other means of raising money.

The lands owned by the shareholders in plaintiff corporation are assessed as irrigated lands and at a substantially higher valuation than non-irrigated lands. There is no other source from which shareholders in the association can receive water for the irrigation of their lands. The dam in question was assessed against plaintiff for 1945 by the Assessor of San Miguel County as follows: 'Storrie Lake $40,000.' The reservoir site itself was separately assessed for 1945, an assessment which plaintiff suggests, but does not seriously urge in its desire for a decision of the more important question, necessarily embraces the dam resting on the 'site.' In view of the public interest involved in a decision of the main question, we shall proceed to resolve it.

While there are points of distinction in the facts between the present case and that of State ex rel. State Tax Commission v. San Luis Power & Water Company, 51 N.M. 294, 183 P.2d 605, 606, we do not think they suffice to remove the one at bar from the latter's controlling influence as a precedent. The opinion in that case, after referring to the statute (1941 Comp. § 76-101) declaring all property, real, personal and intangible shall be subject to taxation, except as in the constitution and existing laws otherwise provided, quotes approvingly the language of our opinion in the earlier case of Sims v. Vosburg, 43 N.M. 255, 91 P.2d 434, as follows:

'All tangible property in New Mexico is subject to taxation in proportion to value, and should be taxed, unless specifically exempted by the constitution or by its authority. Secs. 1, 3, and 5 of Article VIII, N. M. Constitution;Albuquerque Alumnae Ass'n v. Tierney, 37 N.M. 156, 20 P.2d 267; State v. State Tax Commission, 40 N.M. 299, 58 P.2d 1204.'

It is true that in the San Luis Power Co. case, the irrigation company involved was a corporation organized and operated for profit, whereas here the company is a mutual benefit, non-profit organization engaged wholly and solely in the business of storing and distributing water for irrigation to its own shareholders and none others; nevertheless, if we find in the constitution no authority for assessing separately physical works of a non-profit corporation like this in enhanced value of lands irrigated, or an exemption as in the case of community ditches, we see no escape from the conclusion that its physical properties are assessable in kind and subject to taxation as thus assessed. Unfortunately for the plaintiff, it is not enough to show that the function of the physical works is such as to add in the aggregate an even greater taxable value to other properties owned by its shareholders, thus rendering it fair and just, as counsel argue, to relieve the corporation of having its works assessed in kind and taxed as such.

As for an exemption, we are unable to find in constitutional provisions on the subject any justification therefor. Const. art. 8, § 3, exempting, among other things, the property of the United States, the State and all counties, towns, cities and school districts, etc., and 'all property used for educational or charitable purposes,' contains no language broad enough to include the plaintiff. The nearest approach to such language is the exemption accorded 'community ditches and all laterals thereof'. Indeed, the plaintiff asks us to ignore its corporate entity and place it in the class of community ditches, thereby exempting its dam, ditches, laterals and reservoir. The words 'community ditches' as employed in this language of the constitution have, and at the time of their use in Const. Art. 8, § 3 had, a well defined and understood meaning in New Mexico, with which the plaintiff is unable to identify itself. In Candelaria v. Vallejos, 13 N.M. 146, 81 P. 589, 595, concerning them the late territorial Judge Pope, said:

'It is to be noted, however, at the very outset, that the corporation which the Legislature has thus created out of each community ditch in the territory is in no sense a voluntary corporation. The investiture of corporate functions is not even made permissive. The Legislature says that such ditches 'shall * * * be considered as corporations,' and this result follows equally whether all or none of these interested in such ditch desire it to become a corporation. The corporation thus created is not endowed with the general powers pertaining to corporations. It has only the powers expressly or by necessary implication granted to it by the act creating it, and no more. It belongs to the class of corporations known as public involuntary quasi corporations.'

The act creating community ditches quasi public corporations itself contains language which excludes the plaintiff from taking on character as such, if otherwise to be included. L.1895, c. 1, § 8, 1941 Comp. § 77-1424. So far as material it reads:

'The provisions of these sections shall apply only to such ditches as have been heretofore and are now known and regarded as community ditches, under the laws of this state; and under the provisions of said sections, shall be construed to mean such ditches as are not private, and such as are not incorporated under the laws of thisstate or of some other state or territory, and are held and owned by more than two owners as tenants in common, or joint tenants.' (Emphasis added.)

The plaintiff relies upon certain Colorado and Montana cases to support its claim that the dam and physical works are really taxed in the enhanced value added to the lands of the shareholders through irrigation supplied by waters which the dam stores and the ditches distribute. Hence, separate assessment of its works is not required. Among the cases cited are Kendrick, County Treasurer v. Twin Lakes Reservoir Co., 58 Colo. 281, 144 P. 884; Shaw v. Bond, 64 Colo. 366, 171 P. 1142; Hale v. Jefferson County, 39 Mont. 137, 101 P. 973; Brady Irrigation Co. v. Teton County, 107 Mont. 330, 85...