Title: The Colorado Lawyer
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Permanent Link: http://ufdc.ufl.edu/WL00002243/00001
 Material Information
Title: The Colorado Lawyer
Physical Description: Book
Language: English
Publisher: Colorado Bar Association
 Subjects
Spatial Coverage: North America -- United States of America -- Florida
 Notes
Abstract: The Colorado Lawyer, Vol 9, No. 10, October 1980
General Note: Box 10, Folder 12 ( SF Water Rights-Water Crop - 1973, 1976-77 ), Item 7
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
 Record Information
Bibliographic ID: WL00002243
Volume ID: VID00001
Source Institution: Levin College of Law, University of Florida
Holding Location: Levin College of Law, University of Florida
Rights Management: All rights reserved by the source institution and holding location.

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Editorial and Classified
Advertising Offices:
255 Clayton
Denver, Colorado 80206
303/399-1070


* Editor: Arlene Abady

Advertising Sales:
*. Frank Beckstead, 421-2692


Editorial Board:
Chairman:
David R. Johnson/Denver

Arthur M. Frazin/Denver

Donald G. Hacking/Golden

Norman R. Helwig/Denver

William B. Miller/Denver


Carroll E. Multz/Craig


S Copyright 1980. The Colorado Bar
Association, 200 West 14th Avenue.
Denver, Colorado 80204. A rights
reserved. Denver, Colorado 80204.
Published monthly.
SCorrespodence regarding edito-
al and advertising contntet should be
addressed to the editor. Correspond-
ence relating to changes of address,
reprins, back Issues and similar mat-
ters should be addressed to the Col
orado Bar Assocation, 200 West 14th
Avenue, Denver, Colorado 80204.
Authors alone are responsible for
views expressed in their articles.
Manuscripts submitted for consid-
oration should be typewritten,
double-spaeed and submitted n dup-
licate, and are subject to review by the
Editorial Board.


THE COLORADO LAWYER



The official publication of the Colorado Bar Association: Presi-
dent, William H. Nelson; President-Elect, William C. McClemn.


ARTICLES
Water Title Examination
by Ward H. Fischer ....................................................2043
Taxation of Multistate Corporations:
Mobil, Exxon and Colorado
by Julian K. Quattlebaum III, Greg H. Schlender
and Douglas M. Cain .............................................2059
Colorado Oil Shale Development in the 1980's
by Daniel H. Israel..................................................... 2077

FEATURES
Statewide Lawyer Referral Service
by Nancy L Sanders.....................................................2091
Bar Associations' Judicial Polls:
A Summary of Results ..........................................2093

DEPARTMENTS
CLE Accredited Programs ...... ................................2097
CBA Reports: Summary of Board of Governors
Actions, August 1980 Meeting, Aspen......................2104
Tax Tips:
ERISA Compliance for Untimely Amendments ..........2105
Business Law Newsletter: Arbitration of
Broker/Dealer Disputes ..............................................2108
The Civil Litigator: CMI Forfeiture............................2109
Criminal Law Newsletter: The Grand Jury................2116
Family Law Newsletter:
Divorce, Women and Credit ......................................2117
From the W ool-Sack ..................................................2124
Mental Disabilities Law Issues: Legislative Reform
Activities....................................................................... 2125
Lawyers' Announcements .....................................;...2129
Court Business: U.S. District Ct., Local Rule 3(b)
Amended; U.S. District Ct. General Order..................2133
August Advance Sheets
Colorado Court of Appeals ..................................... 2135
Colorado Supreme Court ...................................2193
U.S. District Court: Summaries of Opinions...............2286
In Brief ..................................................................2289
Classified Advertising ...............................................2290
Calendar of Events ....................................................2296


Cover Photo:
Weld County Courthouse
The Weld County Courthouse, located in Greeley, Colorado, was constructed between 1914 and
1917 at a cost of $460,000. The building was redecorated during the Depression and most of the
interior was painted brown. During the 1960's the building was restored as much as possible to its
original white, with pastel trim. The building contains four district courtrooms, three county court-
rooms and the associated offices..


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S. i.L


Water Title

Examination

by Ward H. Fischer


Ward H. Fischer, Fort Colkns, Is a partner i the
firm of Fischer, Brown, Huddleson and Gunn.


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Population increases in our semi-arid
state have inevitably and will inexorably
increase denala ds upon a finite water sup-
ply. Clients vi* increasingly request assist-
ance of counei in assuring the validity and
sufficiency of the water rights held essential
to their wel -being and prosperity. Suffi-
ciency of stpply entails disciplines other
than the law; tt the lawyer can give valu-
able aid in tle determination of the validity
of title to th( eight.
"Title" ii the sense used refers to the
acts, instrurnieits or records by which a
water right h(s been acquired or by which it
can be proven.)
This-articl. explores the means by which
a lawyer can cone to an informed opinion as
to the "title. ''Of course, even though title
to the water right is clear and indefeasible,
counsel must avoid implying to a client that
such fact also establishes either the suffi-
ciency of the supply for continued similar
uses qr its availability for contemplated
changed uses. The amount of water yearly
available for use depends upon God's be-
nevolence and upon the needs of senior
water users.

THE NATURE OF THE RIGHT

We are concerned with the title to a water


right. "Water right" means the right to use
water, or, more accurately:
A water right, acquired under the Arid
Region Doctrine of Appropriation, may
be defined as the exclusive, indepen-
dent property right to the use of water
appropriated according to law from any
natural stream, based upon possession
and the right continued only so long as
the water is actually applied to some
beneficial use or purpose; ... 2
A water right is real property,3 an incor-
poreal hereditament.4 Water is part of the
"negative community"; and, while capable
of being used, it is not susceptible to abso-
lute ownership.5 In Colorado, the title to the
water of the natural streams is in the people
of the state of Cdlorado.' No individual can
hold such title. Thus, a water right is a
usufructuary right only.7
Although title to the water is held by the
people of the state of Colorado, the Col-
orado Constitution provides that the right to
divert the unappropriated waters of any
natural stream to beneficial uses shall never
by denied.8
A water right, then, is acquired by ap-
propriation. An appropriation is generally
defined as the taking of water from'the
natural streams and the application of that
water to a beneficial use. When this act is












THE COLORADO LAWYER


done, the* appropriation is completed.9
Under the Appropriation Doctrine and the
(olorado Constitution, one who first takes
water from the stream for beneficial uses has
a. preferential right, as against subsequent
users, to continue the taking.'0 The right of
use, coupled with this preference, consti-
tutes one's water right."

DIFFERENT CIRCUMSTANCES
AND
DIFFERENT RULES

If a water right is.considered to be a real
property interest, it should follow that a title
examination of the right should be similar to
the ordinary real estate examination. In
many respects it is; but there is a wide vari-
ety of interests in water rights, some of
which bear contractual or personal property
aspects. The water title examiner must be
aware of these varieties and examination
techniques must vary with them.
In Colorado, most water rights involve
one of the following: private ditch; private
reservoir; mutual ditch or reservoir com-
pany; water conservancy district; irrigation
district; public or common carrier ditch; or
well. Specific methods of investigating the
titles to waters from each of these sources is
separately discussed.

Private Ditch
As mentioned, one who takes water from
a natural stream and applies it to beneficial
use is an appropriator and these acts consti-
tute an appropriation. If that is all the ap-
propriator has done, there will be no
documentary evidence upon which the law-
yer can base a judgment as to the existence
of a water right.
However, most rights are evidenced by a
decree as a result of the appropriator having
participated in a general adjudication of
water rights in the water division under the
1943 Adjudication Act'2 or its predecessor
acts or by a decree by the water judge of the
appropriate water division as established by
the 1969 Water Right Determination and


Administration Act (the 1969 Act).3 It
should be emphasized that this decree is not
a conferring of rights, which can be acquired
only by the appropriation, but is a confirma-
tion of the rights so acquired.'4
Most appropriators have wisely partici-
pated in these adjudication proceedings and
have obtained a decree to evidence their
water rights. Participation in such adjudica-
tion proceedings is encouraged by the fact
that failure to participate in them causes
one's right to be subordinated in priority to
those who do so participate.1t
If the right is not evidenced by a decree,
counsel should advise the client (the poten-
tial purchaser) that the seller probably has
nothing to sell. The client can make his own
appropriation and have it adjudicated with
the same priority in administration (at least
within a matter of months) as he could ob-
tain by purchase.
The court's decree, then, is the starting
point for counsel's examination. More often
than not, a certified copy was recorded soon
after it was obtained. Recording is not a
prerequisite to its validity, but it is essential
to its record marketability. If it was re-
corded, it will ordinarily be picked up, as at
least an informational item, in the abstract
covering the seller's lands. If it is not found
there, or if the abstract entry is incomplete, .
the original can be located in the office of the
appropriate district court. '
Prior to the passage of the 1969 Act, Col- 1
orado was divided into water districts.'" One
of the district courts of the judicial district in
which the water district was located had
original jurisdiction for the adjudication of
water rights for that district.17 Therefore, the
decree can be found in that court.
All decrees entered subsequent to the ef-
fective date of the 1969 Act will be found in
the water courtts for the water division in-
volved." Moreover, all water decrees,
whenever enteied, are also kept in the office
of the state engineer, indexed by claimant.
The decree describes the structure, its
point of diversion, the amount of water de-
creed to the structure and the use to which


IIC --- -- I .-


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2044


October


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WATER TITLE EXAMINATION


ie water will be put. If the right was adjudi-
ated before the 1969 Act, the decree will
Iso assign to the ditch a priority number for
purposes of administration by the state en-
ineer or his deputies.
Under the 1943 Adjudication Act, and its
predecessor acts, it was necessary to pre-
erve in writing all testimony as to the de-
'elopment and use of the water.20 Thus, one
an find not only the original statement of
laim, but all testimony, usually in verbatim
transcript, offered in support of claims made
inder the old acts. It is helpful to obtain this
information so as to compare it with the
resent and prospective uses of the water.
additional information as to the location of
he ditch from its headgate to the place of use
an generally be obtained by examining the
lat filed (under the name of the structure) in
he office of the clerk and recorder of the
county in which the headgate is located.21


Youdeserve Mt
r. d1^k mi ni


*
I


If the water is now being used from the
same source, in the same manner, in the
same amount, in the same place and for the
same purposes as was originally decreed,
there is every reason to assume tentatively
that the water right under examination is a
valid and existing one susceptible to pur-
chase by counsel's client. As to claims filed
under the provisions of the 1969 Act, there
is no requirement for a transcript of the tes-
timony offered in support of the claim; but
the application can be examined to obtain
helpful information not repeated in the de-
cree.
Counsel must then trace the chain of title
to the seller. The job is complicated by the
fact that most title insurance companies will
not insure title to water rights; and most
abstract companies will not certify their
abstracts to include water rights. However,
even without such certificate, an abstract of


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.a i 'iJ.I I I


2046


THE COLORADO LAWYER


the documents affecting title to the seller's
*lands will ordinarily be most valuable in that
it will at least show, as an informational if
not a certified item, whether or not the water
'right was historically and in each instance
conveyed as part of the real property. If the
water right is specifically described, coun-
sel's job is made easier.
Unfortunately, the water rights are often
not specifically described. The deed may
mention "appurtenant water rights" or "all
water and water rights" or words to this
effect; or the deed may say nothing at all.
While a Colorado statute proves: "In the
conveyance of water rights the same
formality shall be observed and complied
with as in the conveyance of real estate,"22
the Colorado Supreme Court has held in
many cases that water rights may be con-
veyed even when not mentioned in the
deed.23 The rule is that the intent of the
grantor will be determined-and given ef-
fect.24
The difficulty, of course, from the
standpoint of the title examiner, is that this
intent is not disclosed by the record. Col-
orado cases can provide some guidelines.
For example, if the land is useful only
through irrigation, the presumption will be
that water rights were conveyed.25 This pre-
sumption will be particularly strong if the
price paid for the land represents the price
that would represent the price of irrigated
land, as opposed to dry land.26 However,
these are only some of the matters to be
considered. The broad rule is:
Whether or not a water right passes in a
deed conveying lands, without any
specific mention of the right, depends
upon the intention of the grantor, which
is to be gathered from the express terms
of the deed, and, if that is silent, from
the presumptions arising from cir-
cumstances surrounding the transac-
tion.27
But,
[W]here, in conveyance of land a part
only of the appurtenant water right is
described and specified as being con-


veyed therewith, such specific designa-
tion destroys any presumption of inten-
tion to convey the remainder.2
Even as water rights can be conveyed
without being particularly mentioned, a
specific conveyance of these rights does not
insure that the title is good. Since the
abstract will not ordinarily certify that all
documents pertaining to a particular water
right are abstracted, there is no assurance
that one of the owners in the chain of title did
not convey the water right to a third per-
son.9 If that happened, and if such deed of
conveyance was properly recorded,. the
grantee would be afforded the protection of
the Colorado recording statutes.3
If the abstract excludes the water rights
from its certification, the only way to assure
that it was not separately conveyed is to
conduct a record examination utilizing the
indexes in the office of the county clerk and
recorder. Whether or not this should always
be done, as a practical matter, is another
question. Certainly a very expensive pur-
chase is worthy of counsel's effort and the
client's money. On the other hand, if a very
small and inexpensive tract is involved,
counsel knows that the present owner has
always used the full water right for irrigation
and there is a perfect chain of title disclosed
,in the abstract, this author would be disin-
clined to recommend it. Between these two
extremes, counsel can and should use prac-
tical judgment under the circumstances in
advising the client and allowing him the
choice between increased fees and further
assurances of title.
Although the initial adjudication decree is
the starting point for an examination of title
to the water right, and has been suggested by
some to be similar to a patent, it would be an
error to assume that the question of "title"
is fixed by the decree. All the decree does is
confirm or evidence the fact that waters may
be diverted, in priority, for beneficial uses,
by means of the described structure.31 How-
ever, an adjudication proceeding does not
purport to describe, and it is not designed to
determine, the ownership of the water


October




I Ii.LJ.I .. ... ..


1980


right.32 It follows that there may be persons,
not disclosed by any instrument, who claim
or own an interest in the ditch. The best way
to determine whether others claim an inter-
est in the private ditch is to walk it from its
headgate on the river to its end. If there are
no lateral ditches taking waters from the
ditch to other lands in the vicinity, then the
presumption must be that the record owner
is tde sole owner.
Of course, water rights, just as other real
properties, can be subject to prescriptive
claims.3 Thus, even though the seller's
predecessors in title may once have had ab-
solute ownership of the water right, the
rights of others may have attached through
prescriptive use. Again, walking the ditch
will disclose whether or not other users are,
attempting to obtain the rights to any of the
waters flowing in the ditch.
Finally, the right to the use of water may
be lost through "abandonment"; and there
will not necessarily, or even usually, be any
existing document that will alert counsel to
this fact. Abandonment is failure to use a
water right, coupled with the intention to
abandon the fight.3 Since it involves intent,
which is a subjective thing, it is not ordinar-
ily apparent as to whether non-use itself
constitutes abandonment. Ordinarily, the
courts have found little difficulty in declar-
ing an abandonment when the non-use has
been in excess of the statute of limitations
for prescriptive use of real property.35 The


1969 Act now provides that non-use of the
water, when it is available, for a continuous
period of ten years creates a presumption
that abandonment has occurred.36
The division engineer, with the approval
of the state engineer, is now required period-
ically to submit to the water judge a tabula-
tion of water rights which he deems to have
been abandoned.37 The inclusion of the
ditch on the abandonment list does not
necessarily mean that the court will find that
the right has been abandoned. Conversely,
failure to include a right upon the abandon-
ment list does not imply that the right has not
been abandoned.3s
Those who examine water rights should
realize that as waters become more precious
because of expanding population and in-
creased water needs, there will be an in-
creasing temptation to acquire and attempt
to revive abandoned waterrights. .Counsel
would be wise to avoid being placed in a
position where he can be blamed if substan-
tial sums are used to purchase non-existent
rights.
While counsel can never be certain that a
prior owner has not abandoned the right, he
can help the client determine the likelihood
of an abandonment being declared. The
deputy division engineer (water commis-
sioner) will probably have the history of
diversions of that ditch recorded in his field
books. If an examination of these records
indicates a continuous and unbroken history


WATER TITLE EXAMINATION


2047


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THE COLORADO LAWYER


of diversions to the limit of the water right, it
is strong evidence of non-abandonment.
Also, information can be obtained from the
client, his predecessors in title, and
neighbors who have and are in a position to
have knowledge as to the history of diver-
sions of the particular ditch.
Other field investigations may seem
necessary under the circumstances. One
would naturally recommend a more detailed
or expert investigation on a million dollar
purchase than on a thousand dollar one.
One final step is required to complete the
title examination. Counsel should compare
his information with the state engineer's
tabulation of water rights,39 since it isprima
facie evidence of the date of adjudication,
the date of appropriation and the volume or
amount of water rights listed.4 If there is a
discrepancy, counsel will certainly want to
resolve it.
The confusing element in comparing the
water right under examination with the data
in the tabulation is the priority number. Prior
to 1969, each water district had its own list
of priorities; but the tabulation attempts to
change the numbers to show their relative
right within the whole river basin. There
is no real way to assure that the priority
number assigned on the tabulation is correct;
but if the priority date and the date of adjudi-
cation are correctly listed, that should be
sufficient.41 If these are correct, and if the
ditch is shown on the tabulation to be senior
to others with junior dates (unless awarded
in a previous:adjudication), then counsel is
as well assured as he can be that the data are
correctly listed.42

Private Reservoir
Waters may be directly used or may be
stored for subsequent use43 and the right to
store water in reservoirs may be decreed.
An examination of title to reservoir wa-
ters is conducted in the same manner as ex-
amination of a title to direct flow waters.
The starting point is the decree adjudicating
the right to store water. The decree, which
does not determine title, will nonetheless


name the claimant, the location of the reser.
voir and the amount of water authorized t(
be stored. Storage may be described in acre
feet, in cubic feet or by height of water on i
guage.
In addition to the information contained
in the decree and in the evidence offered
during the adjudication proceedings, coun-
sel can obtain a good deal of additional in-
formation from the map and statement of the
reservoir, if one is on file. Since most reser-
voirs cannot be built without the approval of
the state engineer, and because the state
engineer requires plans and specifications to
be filed before he gives such approval, he
has on file the plans of almost all substantial
reservoirs within the state.44 Copies of most
of these plans are also on file in the office of
the county clerk and recorder in the county
where the reservoir is located.4s These will
show not only the location, but will contain
the data as to how much water is stored at
various gauge heights, all of which may be
useful information.
Counsel can then trace the chain of title
through abstract or record index. As in the
case of private ditches, reservoir water
rights may be conveyed with or held apart
from the land they originally served. They
are conveyed by deed, but can pass by inten-
tion of the grantor to a grantee, even though
not specifically described."
Just as the right to divert-water may be
abandoned, so may the right to store water.
Most reservoirs tend to silt up to some de-
gree, reducing the capacity. If the reduced
capacity is allowed to exist for a long
number of years, the division engineer, as
well as the owners of the reservoirs with
junior storage rights, are apt to claim that the
lost capacity has been abandoned; and they
are likely to prevail in this assertion.
Likewise, reservoir rights may be lost by
prescription.47 Of course, the chances of this
happening are not great since it is a good
deal more difficult to steal water from a
reservoir than it is to merely take it from a
nearby ditch,
The same field investigation as suggested


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2050


October


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1980


WATER TITLE E


198


concerning private ditches should be made
to explore the possibilities of abandonment
and prescriptive use, and to obtain such as-
surance as is possible that the seller is the
successor in title to the claimant.

Water Rights Represented by Stock in
Mutual Ditch and Reservoir Companies
While private ditches are common in the
mountainous areas of Colorado, much of the
waters supplied for irrigation of farm lands
are furnished by mutual ditch and reservoir
companies. These are Colorado non-profit
corporations, formed under one of several
statutes,48 and created for the purpose of
diverting, if necessary, storing and ulti-
mately delivering water to their stockhold-
ers. These stock companies raise the reve-
nue necessary to operate their systems by
levying assessments against all of their
stockhaoders49 and delivering the water pro-
duced by their systems pro-rata to those
stockholders.50
Therefore, the issued stock evidences the
water right and the Colorado Supreme Court
has observed that the ultimate consumers of
the water under a mutual ditch company are
the actual owners of the water right.s'
Nonetheless, the water rights are decreed to
the mutual ditch and reservoir companies'
structures, exemplifying once again that
ownership of water rights is not determined
by adjudication decrees.
The individual's "water right," his inter-


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F


EXAMINATION 2051

est in the decrees awarded to the mutual
company, is represented by his stock certifi-
cate. Colorado statutes contemplate that the
water rights are therefore transferred by en-
dorsement and delivery of the stock certifi-
cate, rather than by deed, in spite of the fact
that the water right is a real property inter-
est.52 However, between the parties, a deed
of conveyance may still operate to transfer
the title to water rights evidenced by mutual
ditch stock. In fact, the water right and the
water stock can be so transferred if that was
the intent of the parties and if the stock
certificate has not been transferred in the
meantime to a bona fide purchaser without
notice.3
However, title so transferred is far from
marketable. As far as the mutual ditch or
reservoir company is concerned, the recita-
tions in deeds are of no interest to it. To
make certain counsel's client is entitled to
obtain water from a mutual ditch or reservoir
company, it is essential to obtain a properly
assigned certificate evidencing the owner-
ship of shares of stock of the mutual ditch
company. It is by the stock certificates, their
assignment and reissue that the water rights
of the individual are conveyed.
Most attorneys have long followed the
practice of both obtaining the certificates of
stock and describing the stock certificates in
the deed. This is the common practice, and
the preferred one. If counsel should discover
that this practice has not been universally














THE COLORADO LAWYER


followed, he may nonetheless conclude that
title to the stock certificate is marketable, as
long as the seller can deliver the properly
endorsed certificates of stock and if counsel
has no reason to believe that the seller has
granted a third person some interest in them.
This author believes that it is unnecessary
for counsel to search the records to deter-
mine whether or not there are any contracts
or deeds outstanding purporting to convey
these stock certificates; and a reading of the
Colorado cases supports this view.5 Natur-
ally, if counsel or the client has actual notice
of the claim of a third person, this must be
cleared up before the title is marketable.5s
The stock certificate issued by the com-
pany will show on its face the owner of the
shares of stock and the number of shares
owned by him or them. It should also show
on its face any interest of a mortgagee. The
amount of water represented by that share of
stock will depend upon the water rights de-
veloped by each such company.

Conservancy District Waters
Conservancy districts are established
under Colorado law,56 and may through
their works make water available to certain
tracts of land for irrigation or to cities or
industries for their uses. The districts have
been claimants for and have obtained de-
crees evidencing their right to divert, store
and deliver waters for these purposes. Al-
though as a matter of legal theory, the ulti-
mate water useris probably the "owner" of
the "water right,"57 counsel would not be
misled, for title examination purposes, if he
veiwed the relationship between the district
and the ultimate water user as contractual in
nature. This relationship is represented by
an "allotment contract," wherein the extent
and the limitation of the uses are detailed.s5
There are over thirty conservancy dis-
tricts in the state and each of them is entitled
tb adopt its own reasonable rules and regu-
lations concerning the allotment and reallo-
cation of waters. Their rules vary drasti-
cally. In some, the waters may be perma-
nently allotted only to municipalities, with


allotments to ditch companies serving the
farmer determined yearly. Such a rule effec-
tively prohibits sale of the "right" sepa-
rately from the land, and tends to assure that
the right remains appurtenant to the lands
served by the ditch.
In other districts, the allottee may remove
the water from one tract and transfer it to
another within the district.59 If this is al-
lowed, all parties to the transaction must
agree. Any transfer is subject to the limita-
tion that the board of directors of the district
must first determine that the water can be
beneficially used upon the new tract.60
When the transaction is completed, the
water is then transferred or reallocated to the
new tract, a new allotment contract is exe-
cuted, and the water follows that tract until
the parties determine otherwise. If the origi-
nal tract is divided, the parties must agree as
to the disposition of the water. If the parties
cannot agree, the district will reallocate the
water to some other tract.
Specific. rules and regulations as to the
circumstances under which a reallotment
petition will be granted or denied vary be-
tween districts, and counsel should be
totally familiar with them before attempting
to advise the client. The districts have ap-
propriate forms which must be completed;
and if water is to be transferred to any use
other than that to which it is presently allo-
cated, title evidence must be submitted as to
the ownership of the involved properties
prior to the transfer of the water.
Finally, if the works of the district have
been constructed through contract with the
United States, there may be contractual ob-
ligations or limitations concerning the wa-
ters that are imposed by the terms of the
contract or by federal statutes. A familiarity
with the statutes and an examination of the
contract between the government and the
district is the only means of discovering
these obligations or limitations.61

Irrigation Districts
Irrigation districts are established pur-
suant to Articles 41, 42 and 43, of Chapter


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37 of the 1973 Colorado Revised Statutes.
The purpose of these districts is the con-
struction of works, generally reservoirs, and
the delivery of the waters of those works to
lands included within the irrigation district.
If the district has contracted with the United
States of America through the reclamation
acts for the construction of the district's
projects, the rights of the irrigator may be
governed not only by the terms of the stat-
ute, but by the terms of the contract between
the district and the United States of
America, and of the federal acts.62 A ques-
tion of title to water produced by irrigation
companies is not so much a question of
'water law or title examination, but of con-
tract law and interpretation and of federal
law concerning reclamation projects.

Public or "Common Carrier" Ditches
Some ditches are not mutual ditches, but
public ditches which appropriate and carry
water for sale to contract holders. The de-
cree for the use of water has been obtained
by the private company, and it holds the
legal "title" to the Water right.63 The ulti-
mate water user's rights arise by virtue of his
contract with that company. That contract,
and the rules and regulations of the com-
pany, are the primary documents determin-
ing the rights of the water user. Charges for
water delivered by these common carriers
are fixed by the county commissioners.64

Wells
With the exception of "exempt" wells
(discussed below) all wells diverting tribu-
tary waters and not located in designated
groundwater basins are subject to the
provisions of the 1969 Act and the doctrine
of priority of appropriation.65 It follows that
diversions by those wells can be curtailed if
such curtailment is necessary to insure a full
supply to a senior water user.66
As a result of recent legislation, most of
These existing wells have been adjudicated67
and are therefore evidenced by a decree of
court, from whence the title search can be
commenced. However, the lack of adjudica-


tion does not necessarily mean that there is
no existing right to divert water by means of
the well. It is possible to obtain an adjudica-
tion even at this time, although the true
priority date is lost.
SThe decree will indicate the name of the
claimant (which is almost invariably the
same person as the owner of the lands upon
which the well is located), the location of the
well, the amount diverted, the type of use
and, if irrigation is involved, the location of
the lands irrigated.
The chances of loss of the well by prescrip-
tive rights (or transfer of the water right to a
bona fide purchaser which is not shown by
the uncertified abstract) are much reduced in
that the well is ordinarily located upon the
land which it serves, and generally serves
only that land. The chance of an abandon-
ment being declared is likewise minimized
since the division engineer ordinarily keeps
no records concerning the well's diversions.
While wells are valuable property, the
client must realize that the well is probably
subordinate in priority to almost all existing
surface decrees. Because of this, the well
diversions can be curtailed should it become
necessary to do so in prder to satisfy the
rights of senior water users. This is a particu-
lar problem on the over-appropriated
streams of the eastern slope. In such areas,
the wells can usually be utilized only par-
tially, or not at all, unless the well is in-
cluded within one of the many plans for
augmentation which are available for
wells" or unless the client develops his own
plan, an expensive procedure.
Wells "exempt" from the strict applica-
tion of the priority doctrine and from the
administration and adjudication proceed-
ings established by the 1969 Act include (in
addition to wells in designated groundwater
basins, discussed below) certain small
domestic, firefighting and stockwatering
wells.69 Such wells are seldom evidenced by
a decree because adjudication, though per-
mitted,70 is not required.71
The wells are exempt not only from ad-
judication, but from administration; that is,


WATER TITLE EXAMINATION


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THE COLORADO LAWYER


they are not required to curtail diversions to
supply senior water rights. However, many
wells which serve domestic needs are not
"exempt" wells. If they were drilled as a
part of a development and governed by a
plan for augmentation, they must be oper-
ated in accordance with that plan. Non-
compliancecould result in the curtailment of
further use.72 The title examiner will, there-
fore, wish to inquire as to whether or not the
domestic well being acquired by the client is
a truly "exempt" well. If it is not, counsel
will want to review the plan for augmenta-
tion so as to advise the client as to its de-
tails." Regarding a true "exempt" well, the
client can be informed that he has a valid
water right even though there is no evidenc-
ing document.
Waters underlying designated groundwa-
ter basins are exempted from the provisions
of the 1969 Act74 and are instead governed
by the Colorado Groundwater Management
Act.75
The application to use designated
groundwater is made to the groundwater
commission. If it is approved by the com-
mission, the state engineer will issue a per-
mit. The place of use cannot be changed
without first obtaining authorization from
the groundwater commission.76 The concept
of the appropriation doctrine is generally
followed;77 but the commission, instead of
the court, awards the priority numbers and
dates.7
The commission prepares a tabulation.of
the water rights awarded to the wells in the
groundwater basin in substantially the same
manner as is done by the state division en-
gineers for the water rights awarded for
tributary groundwaters and waters of natural
streams.79 Thus, in examining title to water
rights connected with wells in designated
groundwater basins, counsel must make cer-
tain that the well either existed prior to the
passage of the Groundwater Act or that it
was subsequently allowed by the groundwa-
ter commission. In so doing, counsel will
also discover (a) the priority date of the well,
(b) its capacity and (c) the land upon which
the waters may be used.


Since the water can be used only for the
purposes indicated in the application, and
since, absent the approval of the groundwa-
ter commission, the water is appurtenant to
the land, every presumption would be in
favor of the water being conveyed by any
deed to the lands. The only exception would
be in those cases where the groundwater
commission has authorized the use of the
water on other lands, all of which can be
determined by counsel in searching the
commission's records.
There is a very special circumstance in
which a well may exist and not be subject to
either the Groundwater Act or the 1969 Act.
These are wells for water determined to be
non-tributary, permits for which are issued
by the state engineer. The water right will
probably be evidenced only by the permit,"8
although some have been adjudicated.

Federal Reserved Rights
Many vested and adjudicated water rights
in Colorado are subject to possible, disen-
feoffment resulting from the claimed "re-
served rights" of the United States of
America. This doctrine, createdby the U.S.
Supreme Court," asserts that the U.S., in
connection with any federal reservation, has
reserved by implication all water rights
upon, under or flowing through that reserva-
tion to the extent necessary to fulfill its pur-:
poses. The exact nature, limitation and ex-
tent of the federal reserved rights is not yet
fully decided.82
The difficulty with the U.S.'s claims is
that, to the extent that the U.S. is awarded
any rights, such rights will be granted a
priority date as of the date of the creation of
the particular reservation, antedating the
priorities awarded in the adjudications sub-
sequent to such date, and without regard to
Colorado rules prohibiting such anteda-
tion.83 Thus, an existing water user, with a
vested water right and evidenced by a final
decree of court, could find this right subor-
dinate to a conflicting right subsequently
awarded to the United States.
There is no really satisfactory way for a
title examiner to handle this possibility. As a


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WATER TITLE EXAMINATION


practical matter, this author believes it likely
that those who divert or impound water out-
side of and below a reservation will
probably be little affected. Those who im-
pound or divert water above or within a
reservation could be in real danger.
As pending cases are decided, counsel
will be in a much better position than he now
is to give clients concrete advice as to the
cloud created by the federal claims.

CONCLUSION-THE TITLE OPINION.

As is apparent, a water right is a very
peculiar type of real property interest which
has sufficient variety of form and is subject
to such a diversity of rules as to preclude a
standard method of examination of title or
form of title opinion. Thus, counsel should
conduct such investigation as the nature of
the right requires and circumstances dictate.
Counsel must commence this task with
the realization that many perfectly valid
water titles may not have been evidenced
through the years and through many con-
veyances with the same precision as is cus-
tomarily.found with fee simple titles to land.
Moreover, curative statutes, bar association
title standards or a treatise such as Patton
on Titles are not much help.
Because of the uncertainties involved
with many water rights, counsel may be
tempted to so qualify his opinion that it
would be meaningless to the prospective
purchaser. Since the client is paying for an
informed judgment as to the state of the title,
he.should be given it. However, if counsel
really concludes that there is substantial
doubt as to who owns the right, it should be
so stated and curative action recommended.
If counsel's investigation has been thor-
ough and he is convinced that title is vested
in the purported owner, that conclusion
should be clearly stated without unduly
qualifying or confusing the matter. In doing
so, counsel should protect himself by stating
in detail the steps taken and the information
upon which he has relied. Where applicable,
the possibilities of abandonment or pre-
scriptive use can be discussed and conclu-


sions based upon described investigations
can be included. If some step is omitted for
practical reasons, or upon instructions of the
client, this can be stated so that counsel will
be perceived as pragmatic rather than inept.
These general guidelines should enable
the practitioner to give good, practical and
reasoned advice to a client and, at the same
time, protect himself from having guaran-
teed the flawlessness of a seldom perfect and
somewhat intangible right to the use of wa-
ter.

NOTES

1. Patton, Titles 1 (193.8).
2. 1 Kinney, Irrigation and Water Rights
759 (2d ed. 1912).
3. Knapp v. Water District, 131 Colo. 42,
279 P.2d 420 (1955).
4. Wyatt v. Irrigation Co., 18 Colo. 298, 33
P. 144 (1893); Monte Vista Co. v. Centennial
Co., 22 Colo, App. 364, 123 P. 831 (1912).
5. Supra, note 2, 288-289; supra, note 3;
supra, note 2 at vol. 2, 1100.
6. Col. Cost. Art. XVI, 5; C.R.S. 1973,
37-82-101; C.R.S. 1973, 37-92-102.
7. Supra, note 2, 289; Monte Vista Co.,
supra, note 4; Wheeler v. Northern
Coloradol. Co., 10 Colo. 582, 17 P. 487 (1887).
8. Colo Const. Art. XVI, 6.
9. Winsor R. & C. Co. v. Lake, S.D. Co.,
44 Colo. 21, 98 P. 729 (1908); C.R.S. 1973,
37-92-103(3).
10. Coffin v. Left Hand Ditch Co., 6 Colo.
443 (1882); Schilling v. Rominger, 4 Colo. 100
(1878).
11. C.R.S. 1973, 37-92-103(12) defines a
water right gs follows:
"Water right" means a right to use in
accordance with its priority a certain portion
of the waters of the state by reason of the
appropriation of the same.
12. C.R. 1963, 148-9-1, et seq.
13. C.R. 1973, 37-92-101, et seq.
14. CresCon Co. v. Whitten, 139 Colo. 273,
338 P.2d 218 (1959).
15. C.R.S. 1963, 148-9-13; C.R.Sr 1973,
37-92-306 and 401.
16. C.R.S. 1963, 148-13:1, et seq.
17. C.R.S. 1963, 148-9-2.
18. "Water court" is really a misnomer, but
used by everyone. The 1969 Act really created


2055


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THE COLORADO LAWYER


only "water judges" and "water clerks," not
courts (C.R.S. 1973, 37-92-203 and 204).
19. Water divisions are established by C.R.S.
1913, 37-92-201. The water clerk for each
division is located in the counties as set forth in
C.R.S. 1973, 37-92-204.
20. C.R.S. 1963, 148-9-10(2).
21. C.R.S. 1963, 148-4-1, et seq., now re-
pealed, required the filing with the office of the
county clerk and recorder of a map and statement
for all ditches and reservoirs to be constructed.
The location of the headgate determined the
proper county. Failure to file was not fatal to the
validity of the appropriation [Archuleta v. Ditch
Co., 118 Colo. 43, 192 P.2d 891 (1948); Hol-
brook Dist. v. Ft. Lyon Co., 84 Colo. 174, 269
P. 574 (1928)].
22. C.R.S. 1973, 38-30-102:
Water Rights Conveyed as Title. In the con-
veyance of water rights in all cases, except
where the ownership of stock in ditch com-
panies or other companies constitutes the
ownership of a water right, the same for-
'mality shall be observed and complied with
as in the conveyance of real estate.
23. Gelwicks v. Todd, 24 Colo. 494, 52 P.
788 (1889).
24. Arnett v. Linehart, 21 Colo. 188, 40 P.
355 (1895).
25. James v. Barker, 99 Colo. 551, 64 P.2d
598 (1937).
26. Id.
27. Insurance Co. v. Childs, 25 Colo. 360, 54
P. 1020 (1898). See also, King v. Ackroyd, 28
Colo. 488, 66 P. 906 (1901) and Daum v. Con-
ley, 27 Colo. 56, 59 P. 753 (1899).
28. Nielson v. Newmyer, 123 Colo. 189, 228
P.2d 456 (1951); Wanamaker Ditch v. Crane,
132 Colo. 366, 288 P.2d 339 (1955); Davis v.
Randall, 44 Colo. 488, 99 P. 322 (1908).
29. Water rights may be conveyed separate
from the land. Supra, note 24; Strickler v. Col-
orado Springs, 16 Colo. 61, 26 P. 313 (1891);
Nielson, supra, note 28.
30. C.R.S. 1973, 38-35-109.
31. Saunders v. Spina, 140 Colo. 317, 344
P.2d 469 (1959).
32. Oppenlander v. Left Hand Ditch Co., 18
Colo. 142, 31 P. 854 (1892); Robinson v. Ditch
Co., 89 Colo. 567, 5 P.2d 115 (1931).
33. Lomas v. Webster, 109 Colo. 107, 122
P.2d 248 (1942); Nesbitt v. Jones, 140 Colo.
412, 344 P.2d 949 (1959).
34. Commonwealth v. Water Ass'n., 96
Colo. 478, 45 P.2d 622 (1935); South Boulder


Co. v. Davidson Co., 87 Colo. 391, 288 P. 177
(1930).
35. Supra, note 2, at vol. 2, 1104; see also,
Irrigation District v. Alamosa, 55 Colo. 386, 135
P. 769 (1913); Boulder Farmers' Ditch Co. v.
Leggett, 63 Colo. 522, 168 P. 742 (1917).
36. C.R.S. 1973 (1976 Supp.), 37-92-
402(11).
37. C.R.S. 1973 (1976 Supp.), 37-92-
402(1)(a).
38. C.R.S. 1973 (1976 Supp.), 37-92-
402(1)(b).
39. C.R.S. 1973 (1976 Supp.), 37-92-
402(1)(a).
40. Supra, note 38.
41. An excellent article which discusses in
some depth the method of locating information
for comparing the tabulation with the examined
water right and which contains a suggested
checklist to insure completeness of examination
is found in White, "A Guide to the Examination
of Water Tabulations," 47 Denver Law Journal
(1970), p. 213.
42. The relative priority of a water right is
determined by the date of appropriation; except
that, as stated herein, rights awarded in a general
adjudication are superior to rights awarded in
subsequent adjudications (under old acts) and
rights for which claim is made in one year are
superior to those for which claims are filed in
subsequent years under the 1969 Act. See gener-
ally, C.R.S. 1973, 37-92-402(l)(b).
43. C.R.S. 1973, 37-87-101.
44. C.R.S. 1973, 37-87-105 provides:
No reservoir of a capacity of more than one
thousand acre-feet or having a dam or em-
bankment in excess of ten feet in vertical
height, or having a surface area at high
waterline in excess of twenty acres shall be
constructed in this state unless the plans and
specifications for the same have first been
approved by the state engineer and filed in
his office.
45. See, C.R.S. 1963, 148-4-1, et seq, no
repealed.
46. See Shamrock Land v. Hagen, 30 Col
App. 127, 489 P.2d 607 (1971), where the u
specified reservoir was held to have been cc
veyed to first grantor, even though not describe
and even though the reservoir was located up
lands conveyed to second grantor.
47. Supra, i-ote 2, at vol. 2, 1034 1
1036.
48. Most ditch companies were formed un
C.R.S. 1973, 7-42-101, et seq; but some m


2056


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WATER TITLE EXAMINATION


formed under the general non-profit corporation
codes.
49. C.R.S. 1973, 7-42-104.
50. Billings Co. v. Industrial Com., 127
Colo. 69, 253 P.2d 1058 (1953).
51. Comstock v. Dist., 97 Colo. 416, 50 P.2d
531 (1953); Jacobucci v. Dist. Ct., 189 Colo.
380, 541 P.2d 667 (1975).
52. C.R.S. 1973, 38-30-102. For a discus-
sion, see Beise, "When Corporate Stock Be-
comes Real Estate," XXI Dicta (March 1944),
p. 53.
53. See, e.g., Kinoshita v. No. Denver Bk.,
181 Colo. 183,508 P.2d 1264 (1973), and cases
discussed therein.
-54. In fact, Kenoshita, id, implied as much.
55. C.R.S. 1973, 38-35-109.
56. C.R.S. 1973, 37-45-101, et seq.
57. Ickes v. Fox, 300 U.S. 82 (1937); Neb-
raska v.Wyoming, 325 U.S. 589 (1945).
58. C.R.S. 1973; 37-45-118(f); C.R.S.
1973, 37-45-131.
59. C.R.S. 1973, 37-45-134(d) and (e).
60. C.R.S. 1973, 37-45-118(f).
* 61. The main statutory limitations are found
in Title 43 of the United States Code. One that
has caused much recent consternation is 43
U,S.C. 431, which limits the use of water from
federal projects to tracts not exceeding 160 acres
occupied by bona fide residents. Those limita-
tions may be waived in some United States' con-
tracts, but not in others.
62. Id.
63. Denver v. Miller, 149 Colo. 96,368 P.2d
982 (1962), states at 99:
The legal title to the decreed appropriation
from the natural stream, .. belongs to the
carrier which has a duty to protect it for the
benefit of the consumers under the ditch.
The carrier also has sufficient interest in the
water right that unused rights of the con-
sumer do not cease to exist but may be held
by the carrier for sale to other consumers
and thus no part of the full decreed appropri-
Sation to the carrier ditch need be abandoned
to the source stream. Mutual ditches are
distinguished by the fact that the consumers
are the sole owners of the ditch and diver-
sion works. They share the costs of opera-
tion without profit while, the carrier ditch is
entitled to a reasonable return on investment


over and above costs.
64. C.R.S. 1973, 37-85-101,et seq.
65. See particularly C.R.S. 1973, 37-92-
102(1), 103(11) and 501.
66. Colorado Springs v. Bender, 148 Colo.
458, 366 P.2d 552(1961); Kuiper v. Well Own-
ersAss'n., 176Colo. 119,490P.2d 268(1971).
67. C.R.S. 1973, 37-92-306.
68. Plans for augmentation are designed, in
large part, to allow well users to develop plans
which will allow the continued operation of their
wells. See generally, C.R.S. 1973, 8 37-92-307.
69. C.R.S. 1973, 37-92-602(1).
70. Davis v. Coriour, 178 Colo. 376,' 497
P.2d 1015 (1972).
71. C.R.S. 1973, 37-92-602.
72. Cache La Poudre Association v. Glacier,
191 Cole. 53, 550 P.2d 288 (1976).
73. This author truly believes that there will
be some mighty disappointed people living in
certain subdivisions whose waters are to be
supplied through "imaginative" plans for aug-
mentation. Many of these plans were developed
on optimistic forecasts which may prove to be
more hope than fact in dry years. No problem will
be apparent while the development is developing;
but when all the lots are sold and all the houses
built and occupied, a lack of replacement or
"augmentation" water resulting from drought
could and, in this author's opinion, will require
the division engineer to order them to cease the
use of their wells for extended periods.
74. C.R.S. 1973, 37-92-602(1)(a).
75. C.R.S. 1973, 37-90-101, et seq.
76. C.R.S. 1973, 37-90-107(1).
77. C.R.S. 1973, 37-90-109.
78. Id. at (3).
79. Id. at (4).
80. C.R.S. 1973, 37-90-137(4).
81. Pre-eminent among the cases are Winters
v. United States, 207 U.S. 564, 28 S.Ct. 207
(1908); Arizona v. California, 373 U.S. 546, 83
S.Ct. 1468 (1963); Cappaert v. United States,
426 U.S. 128, 96 S.Ct. 2062 (1976); and United
States v. New Mexico, 438 U.S. 696, 98 S.Ct.
3012 (1979).
82. These issues will be decided in Colorado
in case Nos. 79SA344, 79SA99 and 79SA100,
now pending in the Colorado Supreme Court.
83. Supra, note 81.


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