Most of the early settlers in the arid and semiarid region located on or near the banks of the natural watercourses, so that the expense and labor necessary to construct canals and ditches would be within their means, and they were thus both the builders and owners of the ditches and the appropriators of the water carried in them. But, with the rapid growth of this arid region, lands more remote from the streams were taken up and water for their irrigation became an imperative necessity. The ditch builder and owner then was often not the company or person that owned the land and appropriated the water carried in the ditch, for irrigation and canal companies were organized for the sole purpose of constructing large waterways and conveying the water for hire from the natural streams and delivering it to the farmers along the lines of their canals or ditches. These waterways were often of great length and they cost in many instances hundreds of thousands of dollars. The total cost of these canals in Colorado is estimated at $19,678,662. The canal of the Northern Colorado Irr. Co., taken out of the South Platte river and circling around Denver on the south and east, is 85 miles long and traverses four different counties. A map of these waterways and ditches, large and small, in Colorado and other arid states, presents a great network of irregular and interfering lines as intricate and confusing as the venous system of the human body.

These waterways and ditches convey the water to great distances from the natural channel, and frequently across intervening hills and mountains into other watersheds. There is thus brought under cultivation large areas which otherwise would have remained barren and unproductive. The necessity for these companies has been recognized by statute and decision (1) in the arid and semi-arid states, and their formation has been encouraged and their public regulation insisted upon. (2) The companies that will be treated in this part of our work are those known as "irrigation companies,' "reservoir companies," "canal companies" or "ditch companies,' but no reference is here made to the public corporations known as irrigation districts. (3) When incorporated, irrigation, reservoir, canal or ditch companies are private corporations. (4) and are organized under the general incorporation acts of the several states and territories with a few provisions especially applicable to this class of corporations. They may be organized solely for the purpose of conveying water for hire, (5) or they may be associations of persons formed for the purpose of constructing ditches and conveying water to their own lands and not for hire. The latter, frequently designated "mutual ditch companies," may or may not be incorporated. The relation between incorporated ditch, canal or reservoir companies and their stockholders or members, is the same as in the case of other private commercial corporations, that is, one of contract from which

(1) Golden Canal Co. v. Bright, 8 Colo. 144, 6 P. 142 ('84); Wheeler v. Northern Colo. Irr. Co., 10 Colo. 582, 17 P. 487 ('87); Combs v. Agricultural D. Co., 17 Colo. 146, 28 P. 966 ('92); Thorpe v. Tenem Ditch Co., 1 Wash. 566, 20 P. 588 ('89); Riverside Water Co. v. Sargent, 112 Cal. 230, 44 P. 560 ('96); and cases cited in following sections.

(2) See statutes, post, Part X.

(3)

(4) ('98).

Ante, $898-103.

San Diego Flume Co. v. Souther [Cal.], 90 Fed. 164

(5) A corporation does not have all or sets out in its articles of incorporation. Oregon R. R. Co., 130 U. S. 1, 9 Sup. Ct. tration, see supra, §95.

the powers it claims Oregon R. R. Co. v. 409 (89). For illus

GENERALLY.

§ 115, Organization and Powers.

springs a trust relation, binding the corporation to conduct the business of the corporation in the interest of its stockholders. (6) Being trustee for its stockholders the corporation is bound to protect their interests. (7) Accordingly it may maintain an action to protect the rights of the consumers under its ditch as well as its stockholders. (8) Irrigation, reservoir, canal and ditch companies may succeed to the rights of another company. (9) They may buy water rights, (10) and they must keep the highways open for the use of the public. (11)

§ 116. Irrigation Companies as Appropriators of Water. Who Owns Water Right-Company or Consumer?

The irrigation statutes and codes of all of the arid and semi-arid states and territories provide for the diversion of water from the public streams by incorporated companies. (12) The power conferred upon the company by its charter to acquire water rights, (13) does not of itself confer the water rights. These must be acquired in the same manner as though the diversion of water from the natural stream was made by an individual. (14) It has been held that where such a company acquires its rights by legislative grant the legislature cannot grant the exclusive right to the water of a stream to the injury of vested

(6) Supply D. Co. v. Elliott, 10 Colo. 327, 15 P. 691 ('87); Rocky Ford Canal, Res. L. L. & T. Co. v. Simpson, 5 Colo. App. 30, 36 P. 638 ('94).

(7) Farmers' Ind. D. Co. v. Agri. D. Co., 22 Colo. 513, 45 P. 444 ('96).

(8) Montrose C. Co. v. Loutsenhizer D. Co., 23 Colo. 233, 48 P. 532 ('96).

(9) Colo. Land & Water Co. v. Rocky Ford Canal, Res. L. L. & Tr. Co., 3 Colo. App. 545, 34 P. 580 ('93).

(10) Water Supply & Storage Co. v. Tenney, 24 Colo. 344, 51 P. 505 ('97).

(11) Farmers' Highline C. & R. Co. v. Westlake, 23 Colo. 26, 46 P. 134 ('96).

(12) (13) (14)

See statutes, post, Part X.

Post, $129.

Mud Cr. Irr., Agri. & M. Co. v. Vivian, 74 Tex. 170, 11 S. W. 1078 ('89). See, also, North Pt. Consol. I. Co. v. Utah & S. L. Co., 16 Utah 246, 52 P. 168 ('98); ante, §§41-62.

private rights. (15) The statutes recognizing the right of corporations to divert water from the natural stream also provide that the water may be transported from the natural stream for hire and "sale," (16) to the distant consumer. (17) A corporation organized for such purposes is charged with the duty of "selling" or "renting" the water, or more accurately the company's carrying service to the consumer under its ditch, upon proper demand and tender, whenever it has water in its canal or ditch undisposed of. (18) A company cannot arbitrarily refuse to "rent" or "sell" the water, or rather its carrying service, (19) but must have a substantial reason for so doing. (20)

Here the question is pertinent: To whom does the right to use the water belong to the company that diverts it from the natural stream or to the consumer who actually applies it to a beneficial use on the land? In other words, who is the real appropriator, the company or the consumer? A mere diversion of water from the natural stream is often spoken of, but inaccurately, as an appropriation of so much water; and the company that makes the diversion is, with like inaccuracy, frequently spoken of as the appropriator. As we have seen, the most essential element in making an appropriation of water, is its application to a beneficial use. (21) Corpora

(15) Munroe v. Ivie, 2 Utah 535 ('80). It was held in Platte Water Co. v. Northern Colo. Irr. Co., 12 Colo. 525, 21 P. 711 ('89), that the legislature could not confer water rights by grant. Possession and use of the water are necessary to create the right to its continued use.

(16) Post, $117, explaining "sale." In Colorado and Arizona and probably in other states the water is not "sold," but only the carrying capacity. Wheeler v. Northern Colo. Irr. Co., 10 Colo. 582, 17 P. 487 ('87); Slosser v. Salt River Val. C. Co., 7 Ariz. 376, 65 P. 332 ('01), and cases cited in note 30, $117. (17) Wheeler v. Northern Colo. Irr. Co., 10 Colo. 582, 17 P. 487 ('87). Statutes, post, Part X.

(18) Golden C. Co. v. Bright, 8 Colo. 144, 6 P. 142 ('84); Wheeler v. Northern Colo. Irr. Co., 10 Colo. 582, 17 P. 487 ('87). (19) Post, $117.

(20) Combs v. Agri. D. Co., 17 Colo. 146, 28 P. 966 ('92); ante, $$96, 97.

(21) Ante, §45.

GENERALLY.

§ 116, Irrigation Companies as Appropriators of Water-Who Owns Water Right-Company or Consumer.

tions diverting and carrying water for hire and "sale" (22) take no part in the actual application of the water to a beneficial use. This application is made by the landowner or occupant, called the consumer, (23) and in many instances if not all the consumer has no interest whatsoever in the ditch or canal, nor in its profits or management. The carrier's diversion, therefore, must unite with the consumer's use in order that there may be a complete appropriation within the meaning of the term. (24)

This is also the holding of the supreme court of Arizona. (25) In this territory the court holds that the water right is an appurtenance to the land. The statutes make the ownership and possession of lands essential to a valid appropriation of public water, and therefore the appropriation is made by the consumer or user through the agency of the carrier. (26)

(22) Post, §117.

(23) Post, $118.

(24) Wheeler v. Northern Colo. Irr. Co., 10 Colo. 582, 17 P. 487 ('87); Farmers' Highline C. & Res. Co. v. Southworth, 13 Colo. 111, 21 P. 1028 ('89); Combs v. Agricultural D. Co., 17 Colo. 146, 28 P. 966 ('92); Wyatt v. Larimer and Weld Irr. Co., 18 Colo. 298, 33 P. 144 ('93), reversing 1 Colo. App. 480, 29 P. 906 ('92). In the case of Nevada Ditch Co. v. Bennett, 30 Ore. 59, 45 P. 472 ('96), the court discusses the Colorado decisions relating to appropriations by companies for the purpose of "sale" or "rental," and points out that they are governed by the construction of the Colorado constitution to the effect that the appropriation of water consists of two acts: first, a diversion; and second, the application thereof to a beneficial use, and that the latter is declared the essential act. In Oregon it is held that a third element is essential to a valid appropriation, consisting of an intent, which, by the nature of things, is peculiarly the act of the appropriator, and which must precede all others in the process of appropriation. "It would seem," says the court, "that he who designed the scheme and made the diversion was the principal, rather than the user who applies the result of the former's labor to his beneficial purpose.' The court declined to say who would be the owner of the appropriation, leaving it to be inferred that the "principal" would own and control it. The theory of the Colorado decisions is followed in Albuquerque Land & Irr. Co. v. Guiterrez, 10 N. M. 177, 61 P. 357 ('00). (25) Slosser v. Salt Riv. Val. C. Co., 7 Ariz. 376, 65 P. 332 ('01); Gould v. Maricopa C. Co., Ariz. 76 P. 600 ('04); reaffirmed, Salt Riv. Val. C. Co. v. Nelssen, ('06).

(26) See ante, §§42, 45.

Ariz., 85 P. 117