Sun Vineyards, Inc. v. Luna County Wine Development Corp.

• Decision Date: 13 September 1988
• Docket Number: No. 17380,17380
• Parties: SUN VINEYARDS, INC., a New Mexico corporation, Plaintiff-Appellee, v. LUNA COUNTY WINE DEVELOPMENT CORPORATION, Atanas Tontchev and Swiss Wine Growers Association, Inc., Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 1290

760 P.2d 1290

107 N.M. 524

SUN VINEYARDS, INC., a New Mexico corporation, Plaintiff-Appellee, v. LUNA COUNTY WINE DEVELOPMENT CORPORATION, Atanas Tontchev and Swiss Wine Growers Association, Inc.,

Defendants-Appellants.

No. 17380.

Supreme Court of New Mexico.

Sept. 13, 1988.

[107 N.M. 525] J. Wayne Woodbury, Silver City, for defendants-appellants.

Campbell, Reeves & Chavez, P.A., William A. Walker, Jr., Las Cruces, for plaintiff-appellee.

OPINION

RANSOM, Justice.

This suit to quiet title to water rights and for breach of contract arose out of the sale of a vineyard near Deming, New Mexico. On August 31, 1984, Luna County Wine Development Corporation (Wine Development) conveyed by warranty deed to Pascal Moulin, Sun Vineyards' predecessor in interest and president, 84.48 acres "with water rights." Of the 84.48 acres, 76.61 were irrigated vineyard.

By early 1983, Wine Development had acquired in Luna County approximately 720 acres of land which included 467.1 acres with block or flood irrigation rights of three acre-feet per acre per year from the Mimbres Underground Water Basin. The land and water rights covered by the contract between the parties to this action were part of this 720 acre tract.

In January of 1984, Wine Development had filed with the New Mexico State Engineer an Application for Permit to Change Place or Purpose of Use of Underground Waters and Combine Wells. The State Engineer, by approving the application, permitted spreading of the water rights over the 720 acre tract, resulting in a duty of water less than three acre-feet per acre per year to the extent more than 467.1 acres were put to beneficial use. No one has questioned the State Engineer's salutary approval of this spreading, whereby appurtenant water rights were to be apportioned by meter to immediately adjacent lands of the owner. Spreading is made possible by and encourages water-saving practices. Cf. Salt River Valley Users' Ass'n v. Kovacovich, 3 Ariz.App. 28, 411 P.2d 201 (1966) (absent application for additional water rights, valid appurtenant water rights may not through water-saving practices be apportioned to immediately adjacent lands of the owner).

In 1986, a dispute arose between Sun Vineyards and Wine Development (as well as Antanas Tontchev and Swiss Wine Growers, successors in interest to Wine Development) regarding the water rights to which Sun Vineyards was entitled under its contract of purchase. Sun Vineyards contended the deed "with water rights" entitled it to water rights with an overall farm duty of three acre-feet per acre per year for the irrigated lands, whereas Wine Development contended that the only water rights appurtenant to the land at the time of execution of the contract consisted of an overall farm duty of 1.636 acre-feet per acre per year. ¹ The district court ruled in favor of Sun Vineyards, ordered the transfer of water rights of three acre-feet per acre per year to cover the acreage in irrigation on the 84.48 acre tract sold to Sun Vineyards, and awarded $30,000 in damages for Wine Development's breach of contract. We affirm.

On appeal, Wine Development raises the following issues: (1) whether, given the language of the application approved by the State Engineer, the historic water rights of three acre-feet per acre per year using block or flood irrigation were, after January 1984, no longer appurtenant to irrigated acreage within the 720 acre tract, or whether final proof of beneficial use and the survey thereof were required to be filed before water rights were severed and made appurtenant to other specified acreage; (2) whether Wine Development intended to transfer and Sun Vineyards intended to buy a vineyard with three acre-feet per acre per year; and (3) whether the award of damages was proper.

The trial court found the Application for Permit stated the land was to be strip or point irrigated utilizing hill or furrow borders and drip or trickle irrigation systems to irrigate vineyard hedgerows, windbreak hedgerows and aesthetic trees, scrubs, flowers, and the like. According to the application, the strips irrigated were to be "at least 6' but not more than 8' in width for the most part." Wine Development's position seems to be that the duty for a drip irrigation system cannot exceed the amount which was permitted by the approval of the application. Therefore, Wine Development argues, the only water rights which would ever become appurtenant to Sun Vineyard's acreage must have a duty of 1.636 acre feet per acre per year. (See footnote 1.)

Wine Development contends there is no evidence to support the court's finding that water rights transferred or moved under a permit become appurtenant only when final proofs and surveys are filed. Wine Development grounds its argument on the absence of any reference to "final proofs and surveys" in statutory water law that provides all waters appropriated for irrigation purposes shall be appurtenant to specified lands so long as beneficially used or until severed and simultaneously made appurtenant to other land. NMSA 1978, Secs. 72-1-2 and 72-5-23 (Repl.Pamp.1985). See State ex rel. Reynolds v. Holguin, 95 N.M. 15, 618 P.2d 359 (1980) (all water rights are appurtenant to specific acreage). A review of the record, however, indicates that testimony was presented in support of the trial court's finding and its compatibility with the statutory language. See Cave v. Cave, 81 N.M. 797, 474 P.2d 480 (1970) (appellate court will not disturb trial court findings which are supported by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion).

While the supervisor of the State Engineer's Deming office testified in general that once an application is filed and approved the water rights are severed from the old location and become appurtenant to the new location, he explained that the transfer is not vested until several conditions are met. See City of Roswell v. Berry, 80 N.M. 110, 452 P.2d 179 (1969) (state engineer has authority to approve application subject to conditions precedent). Clearly, water has to be put to beneficial use, at which time the filing of a survey is required to demonstrate that fact. See State Engineer of New Mexico, Rules and Regulations, Article 2-10 (January 15, 1986) (lands to which water rights are transferred must be surveyed and maps prepared and included in the final inspection and report). The supervisor further testified that a field check and review of the plat would be made before the district office recommended final approval to the State Engineer in Santa Fe who, in turn, would issue a certificate and license. See State Engineer of New Mexico, Rules and Regulations, Articles 2-2 and 2-11 (January 15, 1986) (approval by State Engineer granted only after proper application is made and license shall be issued when all required documents have been filed...