This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case concerns a dispute over water rights associated with mining claims in Sierra County, New Mexico. The Plaintiff, Hydro Resources Corporation, claims ownership of the water rights, asserting that they were developed by the Defendants' predecessor-in-interest, the Copper Flat Partnership, as an agent of Hydro's predecessor-in-interest, Inspiration Development Company. The Defendants, Harris Gray and William Frost, argue that the Partnership owned the water rights through prior appropriation and beneficial use during its tenure as a mineral lessee under a lease agreement with Inspiration (paras 1-7).
Procedural History
- District Court of Sierra County: The court granted summary judgment in favor of Hydro Resources Corporation, quieting title to the water rights in Hydro (para 1).
Parties' Submissions
- Appellants (Defendants): The Defendants argued that the Copper Flat Partnership, as a mineral lessee, developed and owned the water rights through prior appropriation and beneficial use. They contended that the Partnership's declarations of ownership filed with the Office of the State Engineer supported their claim and that the water rights were not appurtenant to the mining claims (paras 7, 11-12, 16).
- Appellee (Plaintiff): Hydro Resources Corporation argued that the Partnership developed the water rights as an agent of Inspiration Development Company, the lessor, and that the water rights were essential to the mining operations and appurtenant to the mining claims. Hydro also asserted that the lease did not expressly convey water rights to the lessee, and thus, the rights remained with the lessor (paras 7, 12-13).
Legal Issues
- Whether the water rights developed by the Copper Flat Partnership as a mineral lessee were owned by the Partnership or by the lessor, Inspiration Development Company.
- Whether the doctrine of prior appropriation applies to grant ownership of the water rights to the Partnership under the circumstances of this case.
Disposition
- The Court of Appeals of New Mexico affirmed the district court's grant of summary judgment in favor of Hydro Resources Corporation, quieting title to the water rights in Hydro (para 17).
Reasons
Per Robinson J. (Alarid and Sutin JJ. concurring):
The court held that the Copper Flat Partnership developed the water rights as an agent of Inspiration Development Company, the lessor, and for the benefit of the mining operations. The court reasoned that the mineral lease, while silent on water rights, permitted the lessee to develop resources necessary for mining operations, including water. The Partnership's actions in drilling wells and using water were undertaken as part of its obligations under the lease and could not sever the water rights from the mining claims (paras 14-15).
The court rejected the Defendants' reliance on the doctrine of prior appropriation, finding that the Partnership's development of water rights was tied to its status as a lessee and could not confer ownership independent of the lessor. The declarations of ownership filed with the Office of the State Engineer did not alter this conclusion, as they did not establish ownership under the circumstances (paras 14-16).
The court also dismissed the Defendants' argument that Hydro's payment of $10 for the mining claims indicated a lack of intent to acquire water rights, noting that the purchase agreement explicitly included appurtenant water rights (para 16).