| OCR Text |
Show 564 THE APPROPRIATIVE RIGHT (2) The Utah mutual company was devised and came into being merely as a convenient means of distributing water among members of a group who were the real owners of the water rights and users of the water represented by the stock issued by the corporation.615 In Utah, the purpose of organizing these corporations was commonly, though not exclusively, for taking over existing unincorporated systems which the benefitted landowners held in common ownership. Many of them were originally built under the supervision of the community leaders and subse- quently were operated by the towns which the irrigated lands surrounded. According to the Utah Supreme Court, "Water rights are pooled in a mutual company for convenience of operation and more efficient distribution, and perhaps for more convenient transfer." And the stock certificate in such a company "is really a certificate showing an undivided part ownership in a certain water supply."616 (3) The Oregon Supreme Court observed that the relation of a mutual water corporation "seems to be clearly that of a holding company, trustee, or agent for the real owners of the water who are putting it to beneficial use upon their lands."617 (4) The mutual water company was used extensively in agricultural development in California, particularly in the southern part of the State, as a vehicle for taking over and operating irrigation systems built in connection with the subdivision and sale of farmlands. Purchasers of irrigable lands received, as part of their purchase, shares of stock in the mutual company while it was still only a paper organization. When 50 percent, or some other prearranged segment of the irrigation company stock, passed to the land- owners, management and operation of the irrigation system was turned over to the mutual company by the construction and development company and thereafter was under the control of the mutual shareholders. According to the rather numerous California decisions relating to the affairs of these organizations, the stockholders of a mutual water company are at least the beneficial holders of the water rights, if not the formal holders, particularly-but not necessarily-if either the water rights or the shares of stock are specifically appurtenant to the land. For example, a mutual company formed in connection with a typical land development enterprise of the character mentioned above succeeded the development company in formal title to the appropriative rights; but the water user-stockholders became the beneficial owners. In a case involving some nine mutual companies, capital stock of which had not been made appurtenant to land but was purchased by an irrigation district for use of district lands, the California Supreme Court held that water rights 61sNash v. Alpine In. Co., 58 Utah 84, 197 Pac. 603 (1921). 616Genob v. Santaquin, 96 Utah 88, 101-102, 80 Pac. (2d) 930 (1938). 6"Eldredge v. Mill Ditch Co., 90 Oreg. 590, 596-597, 177 Pac. 939 (1919). See/« re Walla Walla River, 141 Oreg. 492, 498, 16 Pac. (2d) 939 (1932). |
