Grand Valley Irrigation Co. v. Lesher

Mr. Justice Steele delivered the opinion of the court. No error was committed by the Court in striking parts of the answer, nor in sustaining the demurrer to the second defense. The Grand River Ditch Company, having recognized the transfer of the certificates without a surrender and transfer upon the books of the company, waived that provision; and the defendant cannot complain, because it took title to the property through a deed which expressly reserves these very certificates. It is not a denial of the plaintiffs’ allegation that the defendant furnished water at the headgates free of cost, to aver that upon taking possession it notified plaintiffs that they had no right to take or use the water without cost. It is no defense to the action, to show the manner in which the defendant obtained title and the purpose thereof, unless it appears that the title so shown is the superior title. The demurrer to the second defense of the defendant was properly sustained. The matters therein contained do not constitute a defense. It is immaterial to show the cost of the ditch, or its capacity, or its ownership, or that it has no funds, or that repairs are necessary, or that the company is not formed for the purpose of selling or renting water, or that the plaintiffs have never offered to pay for water, unless, as a matter of fact, the title of the defendant is not subject to the rights of the plaintiffs. The other assignments will be considered at length in the opinion. The defendant below attempted to deny the allegations of the complaint concerning an alleged contract between the — 284 — original holders of certificates and The Grand River Ditch Company at the time of the filing of the amended articles of incorporation, and said, as to this allegation: “This defendant has not and can not' obtain information sufficient upon which to base a belief.” This court has held, that a defendant who desires to avail himself of the provision of the code concerning a denial in that form, must follow the statute in respect thereto. The statute appears to make a distinction between the words “information” and “knowledge,” and to say that one has not sufficient information upon which to base a belief, is not a compliance with the statute, which requires it to be stated that one has not knowledge or information upon which tobase a belief. Jones v. McPhee, 9 Colo. 486; Haney v. People, 12 Colo. 345. Advantage of this non-compliance with the statute may be taken by motion, or the allegation may be treated as not tendering an issue. The denial that such conveyances were executed “as operated to convey perpetual or non-assessable water rights,” is a mere negative pregnant. The remaining allegations of the answer are conclusions of law, and express merely the pleader’s opinion. Treating these portions of the first defense as not tendering an issue, certain of the allegations of the complaint having been admitted at the trial, the judgment should be affirmed, if the complaint states a cause of action. The important question for consideration is the effect of the instrument executed and delivered by The Grand River Ditch Company to the appellees and their grantors. The action is clearly one to quiet the title of the appellees to an alleged easement. It was decided in Wyatt v. Irrigation Co., 18 Colo. 298, that, “A perpetual right to have a certain quantity of water flow through an irrigating ditch is an easement in the ditch, an incorporeal hereditament, descendible by inheritance, and a freehold estate.” Upon the trial the appellant objected to the introduction — 285 — of any testimony by the appellees, on the ground that the complaint did not state a cause of action; the trial court overruled the objection, and this is assigned as error. The ruling of the court in this respect was undoubtedly correct. The complaint alleges, in substance, that The Grand Eiver Ditch Company, in consideration of certain of the appellees transferring to it all their right, title, and interest in and to a certain ditch which they were then operating, and which the company desired to use in connection with its enterprise, granted to each of them, free and clear of all assessments and forever, 150 inches of water, to be delivered to the appellees at their respective head-gates. That, in pursuance of the said agreement, the said The Grand Eiver Ditch Company amended its articles of incorporation, as follows: “The capital stock of our said company is $200,000, to be divided into 20,000 shares of $10.00 each, and there are four perpetual water rights of 150 inches for each water right;” and subsequently the said company issued the four certain certificates set out herein. That, in certain deeds of trust executed thereafter by the said company, including the deed of trust under which the appellant foreclosed, the said water rights were expressly reserved. That, since the execution of said certificates, the appellant and its grantors have delivered to the said appellees and their assigns, at their respective head-gates, the number of inches of water set out in the complaint. That the appellant obtained title to said ditch from The Grand Eiver Ditch Company through foreclosure proceedings. From the complaint, then, it appears that the certificates were issued upon a valid consideration; that, pursuant thereto, The Grand Eiver Ditch Company delivered to each of the holders of said certificates the number of inches of water mentioned therein, at their respective head-gates, without cost; that the appellant, after it became the owner of said ditch, also delivered to the appellees water at the same places and in the same quantity, — 286 — and free of cost or charge; that the certificates were duly recorded, and that, in the deed of trust under which the appellant took title, the water rights of the appellees and their grantors were expressly reserved. The appellees are therefore entitled to recover, if they have shown a sufficient conveyance in writing by The Grand River Ditch Company of these water rights. The instrument set out in the complaint is in the form of a certificate, and purports to convey a perpetual water right. No particular form of conveyance is necessary in such cases. The appellant attacks the instrument and says that by reason of its uncertainty in descrip- • tion it conveys nothing, and it is strenuously urged by the appellant that the certificate does not convey an easement; that water rights in The Grand River Ditch Company are not water rights in the Grand River ditch, and the grant of a perpetual water right in The Grand River Ditch Company does not grant an easement in the Grand River ditch. The language of the certificate is: “This is to certify that O. is the owner of one water right of 150 inches in The Grand River Ditch Company and the same is free from ail dues and assessments.” By this certificate, the company acknowledges that O. is the owner of one of its four perpetual water rights. The words “free from dues or assessments,” must mean that the company has released O. from a payment which it is entitled to from others not holding a similar certificate. The reasonable interpretation of this certificate, then, is that the company acknowledges that O. is entitled to 150 inches of water, to be delivered to him in some manner and at some place. How and where, the certificate does not say. The use of the word “inches” in the certificate must be taken to mean statutory “inches,” as applied to water; and the only manner in which water so measured can be delivered is through a ditch or canal. Nothing further can be gleaned from the certificate itself, and he must be guided by competent evidence of the sur — 287 — rounding circumstances and collateral facts, to correctly interpret this document. This company was incorporated for the purpose of building, and did build, a ditch known as the Grand River ditch; it had no other ditch disclosed by the record, and it had no other property to which this conveyance might relate; for, as is said in Wyatt v. Irrigation Co.: “An irrigating canal company is not the proprietor of the water diverted by it. It must be regarded as an intermediate agency existing for the purpose of aiding consumers in the exercise of their constitutional rights, as well as a private enterprise prosecuted for the benefit of its owners.” It seems quite clear, then, that the company by this certificate acknowledges an obligation to deliver to O. 150 inches of water through the Grand River ditch. Such an acknowledgement in writing is a conveyance in writing of an easement in the Grand River ditch. The complaint alleges that the company issuing the certificate, as well as the appellant, have at all times since the issuance of the certificates delivered water upon the lands of the appellees lying along the line of said ditch, through their head-gates and lateral ditches, during the irrigating season of each year, free of all costs and charges. This averment, as has been shown, was not denied and therefore may be considered in interpreting this certificate. “In the construction of a written contract, the intentions of the parties are to be first sought in the instrument itself. If the intent and meaning of the parties is not clearly disclosed by the language therein employed, then competent evidence bearing on the construction of the instrument by the parties themselves, as by their acts and conduct in its performance, may be considered for the purpose of ascertaining their understanding of its terms.” McPhee v. Young, 13 Colo. 80. Adopting the construction placed upon this certificate by the parties, as evidenced by their acts and conduct respecting it, in connection with the admissions of the appellant and the allegations of the com — 288 — plaint not denied, it is apparent that The Grand River Ditch Company, in consideration of the conveyance to it of a certain ditch by the original holders of the certificates, granted to the holders of these certificates the right to have delivered through the Grand River ditch 150 inches of water, perpetually and free from all dues and assessments, at their head-gates and through their laterals upon their lands lying along the line of the said ditch. The appellant insists that no consideration for the certificates was shown at the trial and that the action fails for that reason. A written instrument imports a consideration, and none need be shown in the first instance; however, the appellees offered at the trial to show the w'hole transaction between the parties which resulted in the execution of these certificates, and upon appellant’s objection this evidence was excluded and it cannot now object that no consideration was shown. While, in some of the deeds offered in evidence the description of the water conveyed is rather indefinite; if considered in connection with the testimony offered, the admissions of the appellant, and the allegations of the complaint not denied, the description is made certain, and we observe no error in overruling the objections made thereto. We must therefore conclude that the appellees were the owners of perpetual, non-assessable water rights in the Grand River ditch to the amount evidenced by the certificates issued by The Grand River Ditch Company and the conveyances from the original holders and their grantees respectively, as shown by the transcript; and that such right to the perpetual use of water constitutes an easement in the Grand River ditch. Having determined that the appellees were the owners of easements in the Grand River ditch as alleged in the complaint, the only question remaining for our consideration is whether or not the appellant purchased, the ditch in ques — 289 — tion burdened with the easements of the appellees. This court has held that, “Knowledge of such facts as ought to put a prudent man upon inquiry as to the truth, charges a subsequent purchaser with notice of all facts pertaining thereto to which diligent inquiry and investigation would have led him.” Jerome v. Carbonate National Bank, 22 Colo. 38. At the time of the purchase of the ditch by the appellant, it had notice from the deed of trust under which it bought that four perpetual water rights were reserved from the deed; by the records of the county it was notified that the articles of incorporation of The Grand River Ditch Company provided for four perpetual, non-assessable water rights, and that certificates for these water rights had been issued to the original holders and their grantees, that these water rights had, by their respective holders, been conveyed with land to the appellees. Added to the notice thus given, there was the physical evidence conveyed by the cultivated land, the lateral ditches, and the head-gates, along the line of the ditch. The existence of these facts, with the notice conveyed by the record of the deeds and certificates, was at least sufficient to put the company upon inquiry. An investigation would have disclosed that these appellees were the owners of easements in the ditch and that such easements were perpetual rights to the number of inches of water mentioned in their respective deeds and certificates, to be delivered at their head-gates through the Grand Diver ditch, free from all dues and assessments. Being satisfied that the appellees are the owners of easements in the ditch of the appellant and that the appellant purchased the ditch burdened therewith, the judgment is affirmed. Affirmed,