Court Opinion

ID: 9864807
Source: CourtListenerOpinion
Date Created: 2023-09-25 16:12:31.805177+00
Date Added: 2024-06-11T12:32:01.565867
License: Public Domain

Mr. Justice Bouck
dissenting.
Francis James, the successor of the original owner, attempts to establish his ownership and right of possession of certain certificates of stock in two reservoir companies and the water rights represented thereby. The certificates were pledged in 1919 expressly as collateral to one Enyart, contemporaneously with the execution in his favor of a deed of trust. The latter instrument expressly covered certain land and also expressly covered certain water rights which were not represented by certicates of stock but consisted of deeded water rights in the Colorado Canal. These water rights so expressly included were known as “river rights” and by this name are conveniently distinguished from the reservoir rights, the certificates whéreof were pledged as aforesaid. A foreclosure sale- was had in 1927 under the deed of trust. Enyart’s successor in interest bid in the land and five-eighths of the mortgaged river rights at a sum which paid the mortgage indebtedness in full. The trustee’s certificate of purchase, issued to the bidder, described the land and river rights so bid in, but mentioned nothing else, not even “appurtenances.” There was admittedly no sale of the pledged certificates of stock or of the reservoir rights which they represented. I think it is clear that, when the foreclosure sale under the deed of trust paid the entire indebtedness, there was no right to sell or foreclose on the pledged certificates, as there would have been if the foreclosure sale had failed to bring the full amount of the debt. The pledgee did not acquire title to the pledged property. He could not unless there was a lawful sale of them. 49 C. J., page 975, §190. And the successor of the owner who both mortgaged and pledged is entitled to reclaim the pledge in view of the satisfac*558tion, by foreclosure sale under the trust deed, of the entire indebtedness.
The judgment of affirmance by the majority of this court, denying the original mortgagor’s successor in interest the right to recover the above described certificates of stock rests on what I regard as a manifestly erroneous proposition, namely, that though the certificates of stock representing’ the reservoir rights were independently pledged as collateral security exactly as personal property is often pledged by many another debtor, and though they were not mentioned in the deed of trust as were the river rights, the reservoir rights nevertheless passed as “appurtenances” of the land covered by the deed of trust. This, I think, is a fallacy.
Of course, water rights like the aforesaid river rights, as distinguished from the reservoir rights, may be and often are expressly conveyed by deed, mortgage or other written instruments. There may be a similar express conveyance of water rights that are represented, as were the reservoir rights here, by certificates of stock. Thompson v. Rowe, 27 Colo. App. 361, 149 Pac. 849.
The reservoir rights are claimed here, however, by the mortgagee’s successor on the theory that they, though unmentioned, were nevertheless covered by the realty mortgage as appurtenances and passed as such by foreclosure sale and the deed thereafter executed. Of course, water rights are in special circumstances sometimes deemed to pass by deed as appurtenances, without any specific mention of them in the conveying instrument. This court said in Arnett v. Linhart, 21 Colo. 188, 190, 40 Pac. 355: “Although a water right may be appurtenant to the land, it is the subject of propert}'- and may be transferred either with or without the land. Strickler v. City of Colorado Springs, 16 Colo. 61 [26 Pac. 313], Being therefore a distinct subject of grant, and transferable either with or without the land, whether a deed to land conveys the water right depends upon the intention of the grantor, which is to be gathered from the *559express 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.” That, naturally, can refer only to facts and circumstances proved by competent evidence to have existed at the time the original conveyance was made. Such facts and circumstances are wholly absent from the record before us.
In the present case the original segregation of the shares of stock in the reservoir company could not have been effected or preserved more carefully or in a more formal way. In the deed of trust the land is minutely described, as are the river rights, with no expression like that — for example — which is quoted in Caldwell v. States, 89 Colo. 529, 535, 6 P. (2d) 1, 3. On the contrary, the record here proves that the original parties by their deliberate choice handled the stock separately by way of pledge as security additional to and separate from the mortgage incumbrance by deed of trust. If ever the old law maxim, expressio unius est exclusio alterius, applied, it would seem to apply here. All the documents in evidence consistently reveal and emphasize this. In other words, the original parties contemplated that river rights were to be foreclosed on under the deed of trust, and the reservoir rights by independent foreclosure of the pledge if at all.
That the separation was a natural and intentional one is subsequently shown by the actual sale of nearly half the stock to a third party, for use on altogether different land lying miles away.
Had there been no pledging of the certificates of stock, and had there been no mention of any water rights at all in the deed of trust, then, to be sure, under the doctrine laid down in Arnett v. Linhart, supra, and numerous other decisions of this court, it would have been proper at the trial to inquire into the facts and circumstances surrounding* the original mortgage transaction, for the *560purpose of ascertaining’ therefrom if possible what the mortgagor, grantor in the deed of trust, intended at the time the instrument was executed. Then, if it had been duly proved that at that particular time, in 1919, the mortgagor intended to have the water rights pass as “ appurtenances” of the land in spite of the fact of their not being mentioned in the instrument, the intention could properly have been given effect by the court.
Such is not the present case under the evidence disclosed by the record.
There was obviously no evidence whatever as to the intention of the mortgagor in 1919, when the deed of trust was executed. Neither circumstantial evidence nor direct evidence was introduced tending even in the slightest degree to show that the beneficial enjoyment of the land in 1919 necessitated the use of the reservoir rights. There was merely an attempt to show that such a necessity existed in 1927, eight years later, after a substantial part of the water rights had indeed been separated and conveyed away by mutual consent.
Furthermore, the 1919 conduct of the original parties, in giving and accepting as collateral the pledged reservoir stock, plainly indicated a purpose to deal with the water rights thereby represented in the usual normal way as capital stock, which is personal property, though it of course symbolized real property that consisted of the water rights corresponding to the stock.
A similar purpose appears from the conduct of the parties a little later, in 1920, when, as already mentioned, the mortgagor’s successor sold nearly half his reservoir rights. These were thereupon used in connection with land seven and more miles away, the mortgagee surrendering the pledged stock for the purpose of such sale, thereby permitting’ the transfer to the purchaser of what now are claimed to have been water rights indispensable to the beneficial enjoyment of the originally mortgaged land. The mortgagee’s acceptance of new certificates for a much smaller amount of the reservoir stock seems *561to be the best possible refutation of the present argument put forth by the defendants in error, namely, that the reservoir rights were indispensable for the use of the original land and were intended to be deemed as necessary appurtenances at the very time when the mortgage was executed. The record discloses nothing as to the value of the land either with or without the reservoir or other water rights, except as and until the witnesses testified about conditions at a point of time eight years after the giving of the mortgage.
Similarly, the mortgagee recognized the distinction and acknowledged the separation of the two kinds of water rights, by executing a formal release — from the lien of the mortgage — -of a corresponding portion of river rights expressly mentioned in the instrument and deliberately sold by the successor of the mortgagor at the same time. The reservoir rights, on the contrary, were not mentioned in the release.
By the unequivocal acts and conduct of the parties to the deed of trust, the stock certificates were excluded from this instrument. Furthermore, the foreclosure sale, at which the property expressly included in the deed of trust was bid in by the mortgagee’s successor at the exact amount then due, necessarily and automatically nullified the lien theretofore resting upon the pledged certificates of reservoir company stock. These certificates now, according to my view, belong to the plaintiff in error and should be turned over to him.
The judgment should be reversed. A judgment in favor of the plaintiff in error should be entered in this' court, or else this court should direct the lower court to enter such a judgment there.
For the reasons I have stated, I dissent.
Mr. Justice Hilliard concurs in this opinion.