Klamath Water Users' Ass'n v. Martin

BURNETT, J. 1, 2. There are several reasons for sustaining the demurrer. In the first place, there is nothing stated respecting the powers or purposes of the plaintiff company indicating in any way that it has authority to maintain this suit. Again, it is said that payment shall consist substantially of applying, to the United States government for water rights and paying to the United States the rates which it demands for such privileges. The complaint does not show that any privity exists between the general government and the plaintiff as to the first six causes of suit, authorizing the plaintiff to enforce payment to the United States. The contract itself does not award a lien to any individual, but impersonally says that the assessments shall constitute a lien, without stating in whose favor the lien exists. As between the corporation and the subscriber, the contract itself provides the penalty for a breach thereof in stating that failure to make application for water rights shall forfeit to the assoeia [58] tion the shares of stock and all rights incident thereto, and that the subscriber, “his heirs and assigns shall thereafter have no right whatsoever as a member or shareholder of this association as to such shares.” It will he noted that this forfeiture is not optional at the will of either party. Bo+h parties have stipulated that this consequence shall follow inevitably upon the failure to apply to the general government for water. It is the exclusive penalty both parties have devised for the designated breach of the subscriber’s covenant. 3-5. It is not alleged that Murdoch was the owner of the land so as to be authorized to impress a lien upon it. Neither is it averred that his successors in title, if he had any, took with notice of the alleged encumbrance. It is true that the complaint avers that the subscription was acknowledged so as to entitle the same to record. As to the first six causes of suit, it is not stated that the instrument was in fact recorded. Neither is it an instrument entitled to record so as to impart notice. The mere fact that, the execution of a document is acknowledged does not entitle it to record unless there is a statute providing for the same. It is true that in the seventh cause of suit it is stated that the instrument was recorded in a certain book of mortgages, but not being entitled to record this does not impart constructive notice to anyone interested in the land. The situation in that respect is analogous to that found in Musgrove v. Bonser, 5 Or. 313 (20 Am. Rep. 737), where it is held that an instrument not entitled to record imparted no constructive knowledge to a subsequent holder of the title to the land described in the conveyance. The present complaint does not state that Martin had any actual knowledge of the contract of subscription or its terms. Other reasons might be adduced to show the defective nature of the primary [59] pleading. The foregoing, however, are deemed sufficient to justify the ruling of the Circuit Court. Its decree is affirmed. Affirmed, Bean, Benson and Harris, JJ., concur.