Opinion
12-20-1949
LOCKE v. YORBA IRRIGATION CO. et al. Civ. 3873.
Launer, Chaffee & Launer, Albert Launer, Walter B. Chaffee, Fullerton, for appellant. Head, Wellington & Jacobs, Santa Ana, Friis & Schutz, Anaheim, McFadden, Turner & Owens, Anaheim, for respondents.
LOCKE
v.
YORBA IRRIGATION CO. et al.
Dec. 20, 1949.
Rehearing Denied Jan. 11, 1950.
Hearing Granted Feb. 16, 1950. *
Launer, Chaffee & Launer, Albert Launer, Walter B. Chaffee, Fullerton, for appellant.
Head, Wellington & Jacobs, Santa Ana, Friis & Schutz, Anaheim, McFadden, Turner & Owens, Anaheim, for respondents.
MUSSELL, Justice.
Action to quiet title to shares of mutual water company stock and to enjoin the cancellation of stock certificates.
Plaintiff was the owner of a 118-acre parcel of real property situated near the Santa Ana River in Orange County. This property, with that of other owners in the vicinity, received water served through what was known as the 'Yorba Ditch'. On December 30, 1913, the defendant, Yorba Irrigation Company, was organized under the laws of California as a mutual water company and on February 5, 1914, plaintiff and all other owners of land served by the Yorba Ditch conveyed to the company, 'its successors and assigns forever all of their and each of their right, title and interest in and claim to, and right to take and receive water from the Santa Ana River for irrigation or other purposes, together with all of their and each of their riparian rights to take water from said Santa Ana River appurtenant to any and all land in the Rancho Canon de Santa Ana in the County of Orange, State of California, owned by them or any of them or in which they or any of them may have any right, title or interest'. In return for the conveyance of individual water rights, each owner received one share of stock in the company for each hour of flow of the Yorba Ditch to which he had theretofore become entitled, and in return for the conveyance to the company of the water rights in the Santa Ana River with respect to her 118-acre parcel, plaintiff received seven shares of stock. The stock so issued was not apportioned to the lands on an acreage basis by the stock certificate or by the by-laws of the company and the stock issued was designated in the stock certificates as appurtenant to the respective particular parcels of land of the various owners. Plaintiff's seven shares were described as appurtenant to her entire 118 acres.
The provisions of the by-laws of the company, insofar as are applicable here, are as follows:
Article XVI
Shares of Stock
'Shares of stock in this company shall not be transferable except with the land for which it is issued, and a conveyance of the land shall constitute a transfer of the stock appurtenant thereto, to the purchaser.
'Each share of the capital stock shall entitle the owner thereof to one hours run to two hundred (200) inches of water every ten and one-half days, on the land owned by him and located under the canals of the company, water measured at the head of the company's ditch, and proportionate amounts for fractional shares.'
Article XXIII
Restrictions on Delivery of Water
'Water shall only be sold, distributed, supplied or delivered by this company to owners of its capital stock and such stock shall be appurtenant to certain lands when the same are described in the certificate issued therefor.'
Article XXIV
Transfer of Stock
'When such certificate shall be so issued and a certified copy of the preceding by-law (XXIII) recorded in the office of the County Recorder in the County where such lands are situated, the shares of stock so located on any land shall only be transferred with such lands and shall pass as an appurtenance thereto.'
On November 12, 1919, the plaintiff and her husband conveyed 62 acres of the 118-acre parcel to Mary E. Rhorer. The deed covering this conveyance reserved to the grantors 'the right of way for canals, flumes, aqueducts, etc., as conveyed to the Canon de Santa Ana Water Company, and reserving all right to water from the Santa Ana River as conveyed to the Yorba Irrigation Company, a corporation, by deed recorded in Book 250 page 66 of Deeds'. Shortly after the execution of this conveyance the 62 acres was acquired by the predecessors in interest of the present defendants, other than the irrigation company, and was known as the 'Goodwin-Dierker Tract'. Goodwin and Dierker and their respective wives on March 28, 1922, were the record owners of this tract, each having an undivided one-fourth interest therein as tenants in common. The tract was subdivided and the defendants, other than the irrigation company, are owners of parcels of the land so subdivided.
At the time of the conveyance to Mary E. Rhorer the stock certificates issued to plaintiff did not recite that they were appurtenant to any parcel of land. Two certificates which had been issued to plaintiff in 1914 described three and one-half shares as appurtenant to the west one-half and the other three and one-half shares as appurtenant to the east one-half of the 118-acre parcel. These certificates had been cancelled in 1917.
In the early part of 1923 plaintiff sought to obtain a loan on the 56 acres retained by her and in this connection request was made that the irrigation company describe the seven shares held by plaintiff as appurtenant to the 56-acre parcel which she then owned. The company advised Mr. Locke that the request could not be granted unless the owners of the 62-acre tract consented to this arrangement or disclaimed any right to the stock and on March 28, 1923, Harry F. Dierker and Charles O. Goodwin, by letter to the company, consented that a stock certificate be issued to plaintiff describing the seven shares owned by her as appurtenant to the 56-acre tract. The company then issued a certificate which described the seven shares of stock as appurtenant to the 56-acre parcel, and subsequent certificates also described the stock as appurtenant to said land.
Several years later property owners in the Goodwin-Dierker Tract, including defendant Fickle, demanded that the Yorba Irrigation Company issue stock to them as appurtenant to the 62 acres conveyed by the Rhorer deed. On November 10, 1945, the irrigation company issued stock to defendant Fickle in proportion to the land owned by him and cancelled a like amount from plaintiff's shares, following which the present action was commenced.
The trial court found that on February 5, 1914, plaintiff conveyed to defendant, Yorba Irrigation Company, all her water rights in and to the Santa Ana River arising out of her ownership of the 118-acre parcel of land and that the seven shares of stock issued to her were appurtenant to all of said land; that plaintiff did not by her deed to Mary E. Rhorer reserve and portion of the stock of the irrigation company appurtenant to the 62 acres conveyed to the said Mary E. Rhorer. The court held that each of the successors in interest of Mary E. Rhorer, as to any portion of the land conveyed to her, was the owner of a portion of the seven shares of stock issued to plaintiff, said portion being determined by the number of acres or fractions thereof owned by each.
We conclude that the findings and judgment are supported by the evidence.
Plaintiff, by her deed to the corporation in 1914, conveyed all of her water rights to the Yorba Irrigation Company. Obviously, thereafter she had no water rights which could be reserved to her in the deed made in 1919 to Mary E. Rhorer. At the time of the conveyance to Mary E. Rhorer, the seven shares of stock which plaintiff owned were appurtenant to the entire 118-acre tract, and while Mary E. Rhorer could have presented her deed to the irrigation company and thereupon obtained a certificate of stock for the number of shares attached or appurtenant to the land conveyed to her, as shown by the books and records of the company, Statute of 1923, p. 757; Deerings General Law, Act No. 9113, this was not done and the record shows that no damand was made for the issuance of stock as being appurtenant to the 62-acre tract until that of defendant Fickle in November, 1945.
The by-laws of the irrigation company provide that shares of stock shall not be transferred except with the land for which it is issued; that a conveyance of the land shall constitute a transfer of the stock appurtenant thereto to the purchaser; that when such certificate shall be so issued and a certified copy of the by-law recorded, the shares of stock on such land shall only be transferred with such lands and shall pass as an appurtenance thereto. The articles of incorporation of the irrigation company, the by-laws and certificate constitute the evidence of the contract between plaintiff and the irrigation company. Riverside Land Co. v. Jarvis, 174 Cal. 316, 327, 163 P. 54. Plaintiff, as a stockholder of the company, was bound by such articles of incorporation and regularly adopted by-laws. W. M. McFadden v. Board of Supervisors of Los Angeles County, 74 Cal. 571, 574, 16 P. 397. Under the provisions of the by-laws plaintiff's shares of stock in the company became appurtenant to the 118-acre tract when she conveyed her rights to the company and received stock issued to her. Wheat v. Thomas, 209 Cal. 306, 315, 287 P. 102.
The company did not record the by-law relative to the transfer of stock until 1945. The by-laws provide that water shall only be sold, distributed, supplied or delivered by the company to owners of its capital stock and that such stock is appurtenant to certain lands when the same are described in the certificate issued therefor. The effect of the failure to record such a by-law was commented upon in the case of Security Commercial & Savings Bank of El Centro v. Imperial Water Co., 183 Cal. 488, at page 496, 192 P. 22, 25, in which the court said:
'The findings of the court, including the stipulation between the parties as to the facts, indicate the probability that Imperial Water Company No. 1 had provided in its by-laws that the water it was distributing should only be 'sold, distributed, supplied, or delivered to owners of its capital stock, and that such stock shall be appurtenant to' the lands described in the certificate issued therefor, and that a certified copy of such by-laws had been recorded in the office of the county recorder in the county where the lands are now, or were then, situated, as provided in section 324 of the Civil Code as amended in 1895. (Stats. 1895, p. 118). If these be the facts, then under that section, the shares of stock can be transferred only with the lands, and can pass as an appurtenance thereto, and not otherwise. The result would be that a purchaser of the stock, without the land, would obtain by such purchase no title to the stock and no right to receive the water which the stock represents. Possibly the same results would follow from the by-laws and certificates, even if the copy of by-laws was not recorded. Riverside Land Co. v. Jarvis, 174 Cal. 328, 163 P. 54; Estate of Thomas, 147 Cal. 243, 81 P. 539; Thayer v. California Development Co., 164 Cal. 136, 128 P. 21. But as to this we express no opinion.'
In the instant case, however, the by-laws were recorded in 1945 and prior to the commencement of the present action. Plaintiff was bound by her contract with the company and the failure to record would not relieve her of the restrictions on delivery of water. The provisions of the by-law that the stock was appurtenant to her lands when described in the certificate issued to her are binding upon her.
Plaintiff contends that she obtained title to the water rights represented by the shares in controversy by adverse possession. However, as heretofore noted, she conveyed all of her water rights to the company by her deed to the company and the court found from conflicting evidence that the plaintiff had not used the full amount of water available to her under the seven shares of stock on the 56 acres retained by her and that the use of the water by plaintiff on said land was not adverse to the claim of the defendants. The rule is that to establish adverse possession of water it is necessary that:
'(1) The possession must be actual occupation, open and notorious, not clandestine. (2) It must be hostile to the plaintiff's title. (3) It must be held under a claim of title exclusive of any other right, as one's own. (4) It must be continuous and uninterrupted for a period of five years prior to the commencement of the action, not, however, necessarily next before the commencement of the action.' (Lee v. Pacific Gas & Electric Co. (1936), 7 Cal.2d 114.)
The testimony indicates that the actual amount of water used by plaintiff did not interfere with the rights of the defendants to use of water on the 62 acres conveyed to them if they had in fact desired to exercise their rights thereto.
It is contended by the plaintiff that the by-law restrictions were waived by the defendant company by its action in issuing stock following the receipt of the Goodwin-Dierker letter in 1923. However, it is apparent that the plaintiff was informed by the company that unless the consent of the owners of the 62-acre tract was obtained, the stock could not be issued as appurtenant to the 56-acre tract, and since the letter was not signed by all of the owners, such consent was not obtained. As heretofore noted, Goodwin and Dierker and their respective wives each had an undivided one-fourth interest in the 62 acres as tenants in common and one joint tenant or tenant in common cannot bind his co-tenant by any contract which he may make relating to the common property. Oberwise v. Poulos, 124 Cal.App. 247, 251, 12 P.2d 156; Most v. Passman, 21 Cal.App.2d 729, 731, 70 P.2d 271; Brown v. Oxtoby, 45 Cal.App.2d 702, 709, 114 P.2d 622. It follows that there was no waiver insofar as the defendant Fickle was concerned or the other owners of property in the Goodwin-Dierker Tract.
Judgment affirmed.
GRIFFIN, Acting P. J., concurs. --------------- * Subsequent opinion 217 P.2d 425.