Court Opinion

ID: 5177518
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:10:12.465504+00
Date Added: 2024-06-11T08:26:23.406005
License: Public Domain

JUDGE BOORAS,
dissenting.
{ 19 I respectfully dissent from the majority's decision that water rights evidenced by shares in a mutual ditch company qualify as exempt from levy and execution by creditors under Colorado's homestead exemption statute. The majority reasons that by including a "farm" as property subject to the homestead exemption, the General Assembly in*427tended to include irrigation water rights that are necessary to grow crops. I disagree that the statutory homestead exemption was intended to shield mutual ditch company stock shares.
I. Whether Water Rights in Colorado Are "Appurtenant" to Land
120 The majority concludes that a farm that is subject to the homestead exemption includes "water rights appurtenant to the land." In Colorado, a water right is generally not appurtenant to land, and thus, can be bought, sold and transferred separately from land. E. Ridge of Fort Collins, LLC. v. Larimer & Weld Irrigation Co., 109 P.3d 969, 978 (Colo.2005). However, the term "appurtenant" is sometimes used in connection with water rights in cases involving transfers of land.
21 For example, transfer of water rights along with deeded land where the deed is silent as to the water rights depends on whether they are necessary and essential for the beneficial use of the land, or, in other words, "appurtenant." Generally, where a deed expressly transfers only a portion of water rights with land, the grantor retains the portion of the water rights that is not referenced. See Arnelt v. Linkhart, 21 Colo. 188, 190, 40 P. 355, 355 (1895) a deed to land conveys the water right depends upon the intention of the grantor, which is to be gathered from the express terms of the deed; or, when it is silent as to the water right, from the presumption that arises from the circumstances, and whether such right is or is not incident to and necessary to the beneficial enjoyment of the land."). However, where a deed is silent, whether water rights are transferred along with the land depends on the use of the water and whether the water rights are necessary and essential for the beneficial use of the land. Kinoshita v. N. Denver Bank, 181 Colo. 183, 188, 508 P.2d 1264, 1267 (1978). If a court finds that water rights are "appurtenant" to the real property conveyed, a presumption arises that a transferor intended to include the water rights among the rights conveyed. Means v. Pratt, 138 Colo. 214, 220, 331 P.2d 805, 808 (1958) (where a claim to water rights has been consistently asserted and the claimed water has been used upon the land for nearly fifty years, a presumption arises that the grantor intended to convey by deed any and all water rights incident to and necessary to the beneficial enjoyment of the deeded land). Similarly, the concept has been applied in probate proceedings where an unambiguous will was silent as to whether water rights were to be transferred with specifically devised land. Matter of Estate of Palizzi, 854 P.2d 1256, 1260 (Colo.1993) (trial court may imply a devise of the water rights after examining all of the surrounding facts and circumstances of the case and evaluating whether the water rights are necessary for the beneficial use of the land).
1 22 However, this use of the word "appurtenant" does not mean that the water rights are to be treated as "part of the land," as the majority states. Even where water is necessary for beneficial use, an owner can sell land, but retain water rights by expressly stating so in the deed or instrument of transfer. Arnelt, 21 Colo. 188, 40 P. 855. Because the instant case does not involve the conveyance of land which may or may not include water rights, the cases relied on by the majority characterizing water rights as "appurtenant to land" are inapposite.
II. Purpose of the Colorado Homestead Exemption
4 23 The homestead exemption statute was designed to "secure to the householder a home for himself and family regardless of his financial condition, whether solvent or insolvent." Woodward v. People's Nat'l Bank, 2 Colo.App. 369, 371, 31 P. 184, 184 (1892). Colorado courts have regarded the homestead as a property right, the purpose of which is to preserve a right of occupancy, and to preserve family habitation. In re Pruitt, 829 F.2d 1002, 1004 (10th Cir.1987). The Colorado Supreme Court has described the homestead exemption as providing protection for "premises" occupied as a home. Wright v. Whittick, 18 Colo. 54, 58, 81 P. 490, 491 (1892). _
1 24 The homestead can consist "of a house and lot or lots or of a farm consisting of any number of acres." § 38-41-205, C.R.8.2013. *428Additionally, the homesteaded property is only exempt while occupied as a home by the owner or his or her family. § 38-41-2038, C.R.8.2018.
125 Although water rights are characterized as real property in Colorado, they are usufructuary rights that are obviously not capable of being occupied as a home. So the water rights themselves do not qualify for the homestead exemption.
III. Operation of Homestead Property as a "Farm"
{26 The majority reasons that because "a farm" can be a homestead, water rights that are necessary to allow a property to "operate as a farm" must be included in a homestead exemption. The majority recognizes that the term "farm" is not defined in the homestead exemption statute, but adopts the fairly restrictive definition in section 39-1-102(8.5), C.R.S.2013, pertaining to taxation. Section 39-1-102(3.5) defines "farm" in the taxation context as "a parcel of land which is used to produce agricultural products that originate from the land's productivity for the primary purpose of obtaining a monetary profit." In this context, the supreme court has interpreted "from the land's productivity" as requiring a connection between the agricultural product and the soil in order for a parcel to receive favorable tax treatment. See Welby Gardens v. Adams Cnty. Bd. of Equalization, 71 P.3d 992, 1000 (Colo.2003) (greenhouse is not considered a "farm" under seetion 89-1-102(8.5) because there must be some connection between the agricultural product and the soil itself in order to qualify as "originating from the land's productivity").
127 Operation as a "farm," however, does not necessarily involve irrigated erops. In different contexts other statutes provide a much broader definition of "farm." For example, section 8-8-104(11)(f), C.R.S.20183, and section 8-70-109(2), C.R.S8.2013, in the context of labor and industry, provide that "farm" includes "stock, dairy, poultry, fur-bearing animal, and truck farms, plantations, ranches, nurseries, ranges, greenhouses, orchards, and other structures used for the raising of agricultural or horticultural commodities." See also § 4-9.5-108(8), C.R.S. 2013 (in the context of the uniform commercial code, defining " '[flarm product" as "an agricultural commodity, a species of livestock used or produced in farming operations, or a product of such erop or livestock in its un-manufactured state," and listing numerous examples of plants and animals).
128 Thus, it is incorrect to assume that the use of the term "farm" necessarily pertains to growing irrigated crops, outside of the taxation context. Simply providing that the homestead exemption can apply to "a farm" does not mean that the General Assembly's intent was to facilitate growing of crops on the homestead property.
129 Furthermore, due to the nature of water rights in Colorado, ownership of a water right does not guarantee that enough water pursuant to that right will be available for irrigation of a particular tract of land. Kobobel v. State, Dep't of Natural Res., 249 P.3d 1127, 1134-85 (Colo.2011). The risk of curtailment is inherent to Colorado water rights holders. Id. at 1185. Therefore, exempting a water right from creditors does not guarantee that the character of a homestead as irrigated farm land will be maintained from year to year.
130 Comparing the Colorado homestead exemption statute to homestead exemption statutes of other states, the use of the word "farm" appears to simply reflect an urban/rural distinction. See Roche v. Du Bois, 223 Wis. 438, 271 N.W. 84, 86 (1937) (noting that the word "agricultural" is used in homestead exemption statute as a distinction between rural and urban land, rather than in a technical sense), overruled on other grounds by Ohio Cas. Ins. Co. v. Holz & Holz, Inc., 24 Wis.2d 587, 129 N.W.2d 330 (1964). This distinction is consistent with statutes that, historically, viewed a "lot" as a subdivided unit in a town or city as opposed to "agricultural land." See Town of Sheridan v. Nesbitt, 128 Colo. 121, 124, 227 P.2d 1000, 1001 (1951) (discussing statutes for disconnecting agricultural land from incorporated town, which require, among other things, that no part of the agricultural land area has been "platted into lots or blocks" as part of the town); People v. Milan, 89 Colo. 556, 565-66, 5 P.2d 249, 258 (1981) (noting amendment to *4291915 statute which had provided "all lands platted or subdivided into residence or business lots shall not be considered agricultural lands").
1381 The legislative history reflects this simple urban/rural distinction. A previous version of section 88-41-205 allowed the homestead exemption for "a house and lot or lots, in any town or city, or of a farm consisting of any number of acres." See In re Wallace's Estate, 125 Colo. 584, 590, 246 P.2d 894 (1952). A 1982 amendment struck the words "in any town or city" in order to insure that land in an unincorporated area that was not being used for farming would be included. See Hearing on H.B. 1060 Before the H. Local Gov. Comm., 58d Leg., 2d Reg. Sess. (Colo. 1982).
32 Thus, the reference to "a house and lot or lots" or "a farm consisting of any number of acres" appears to clarify that the exemption does not pertain only to the house, but also to the surrounding land, reflecting the relative sizes of urban and rural homesteads; not to serve as an additional protection for farmland, as such.
IV. Plain Language of Section 38-41-205
T383 Notably, exemption statutes in some states specifically include water rights. See Utah Code Ann. § 78B-5-508(4)(a) (West 2018) ("water rights and interests, either in the form of corporate stock or otherwise, owned by the homestead claimant are exempt from execution to the extent that those rights and interests are necessarily employed in supplying water to the homestead for domestic and irrigating purposes"); Idabo Code Ann § 11-605(7) (West 2013) (including as exemption of personal property from attachment or levy "[a] water right not to exceed one hundred sixty (160) inches of water used for the irrigation of lands actually cultivated by the individual"). As in these states, had the General Assembly intended to protect irrigation water rights under the Colorado homestead exemption, it could have done so. But it did not.
{34 Additionally, a separate statute provides exemptions from levy and sale under a writ of attachment or writ of execution for various kinds of property, such as household goods and tools used in a gainful occupation. See § 13-54-102(1), C.R.S.20181 Again, the General Assembly did not include irrigation water rights in these statutory exemptions.
185 The majority reasons that water rights should not be "separated" from homestead property because debtors are not required to "strip homestead property of its timber, or soil." However, soil, trees, and grass are generally considered part of the land surrounding the house that constitutes the homestead lot or acreage. See United States v. Holmes, 646 F.3d 659, 661 (9th Cir.2011) (the destruction of "land" includes vegetative growth, bodies of water, rock formations, and fossils that are found on the earth). In Colorado, water appropriation rights are not part of a property owner's land. See Bd. of Cnty. Commis. v. Park Cnty. Sportsmen's Ranch, L.L.P., 45 P.3d 693, 710 (Colo.2002) (the law of minerals and property ownership is inapplicable to water and water use rights); People v. Emmert, 198 Colo. 187, 143, 597 P.2d 1025, 1029 (1979) (a riparian bed owner's exclusive use of water overlying his or her land is distinguished from the right of water appropriation). As for timber and growing erops, jurisdictions are divided as to whether these may be attached by creditors. Vought v. Kanne, 10 F.2d 747, 748 (8th Cir.1926) ('There is some conflict in the different jurisdictions as to whether such crops, while unsevered, are personalty or realty but the great weight of authority is that unsevered annual erops are personalty."). In bankruptey proceedings, however, federal courts have ruled that growing crops are not exempt under a homestead exemption, absent an express provision for such an exemption from the state legislature. Id. at 749 (noting that the Minnesota homestead statute refers entirely to the resi*430dence and to land, and makes no mention of crops or produce); In re Sullivan, 148 F. 815, 818 (8th Cir.1906) (fully matured corn standing in the field of a homestead is not exempt under Iowa's homestead exemption statute).
36 Finally, although the majority characterizes the attachment of the mutual ditch company shares as "dehydrating" the homestead, the mutual ditch company shares were not the only source of water for the property. Plaintiffs sought to attach only water rights that were evidenced by the mutual ditch company stock shares, leaving to the Hock-ers "2 acre foot units of water as allocated by the Northern Colorado Water Conservancy District" that were referenced in the Hock-ers' deed. No party has alleged that the remaining water was insufficient for residential needs.
_- 187 In my view, the majority reads too much into the single word "farm," and in doing so, makes a decision of public policy that should be left to the General Assembly. See Wright, 18 Colo. at 57, 31 P. at 491 ("[homestead] exemption statutes are to be liberally construed so as to promote the humane policy of such legislation; but the courts cannot, by construction, annex to such statutes consequences not fairly within their purview or intent"); Claim of Green, 789 P.2d 481, 488 (Colo.App.1990) ("An exception not made by the General Assembly cannot be read into the statute."). Because I do not read the plain language of the homestead exemption statute to include shares in a mutual ditch company, I would affirm the trial court's judgment.

. This statute exempts various items used to engage in agriculture, to the extent of fifty thousand dollars. § 13-54-102(1)(g)(I), C.R.S.2013. The parties have not argued, however, that a water right can be considered an "agricultural tool" under this statute. See Crum v. April Corp., 62 P.3d 1039, 1042 (Colo.App.2002) (arguments not raised in the trial court cannot be considered on appeal).