The Utah Court of Appeals recently issued its decision in the case of Zundel v. Ramsdell. The case focused on the issue of whether water shares were included in a land transaction based on appurtenance and the wording of the deed.
Robert Brough (through his Trust) owned 17 acres of farmland in Box Elder County, which was irrigated with 15.87 shares of stock in Bear River Canal Company. In 2007, the Trust conveyed the property to Brough Properties LLC, and the deed stated that the conveyance included "all water rights appurtenant thereto, if any." The Trust did not, however, transfer any water shares to Brough Properties. In 2011, Brough Properties sold the land to the Zundels. Nothing was said about water, but the Zundels expected to receive some water shares. However, no shares were ever transferred to the Zundels. Instead, the Trust transferred the water shares to Robert's daughters, with instructions that they not transfer any shares to the Zundels. In 2019, the Zundels filed suit against the daughters, seeking to quiet title to the water shares.
The Zundels' primary argument asserted that the water shares were appurtenant (or attached) to the land, and therefore the shares passed with the land when the land was conveyed from the Trust to Brough Properties, and then from Brough Properties to the Zundels. The case ultimately went to trial, and the jury determined that the water shares were appurtenant to the land, but that the Trust did not intend to transfer the water shares to Brough Properties. The Zundels attempted to challenge the jury's determinations, but the district court ultimately ruled that the daughters (and not the Zundels) were the legal owners of the shares. The Zundels then appealed.
The law in existence at the time of the 2007 conveyance was that water shares did not automatically pass with land, but that presumption could be rebutted by clear and convincing evidence (1) that the water shares were appurtenant to the land and (2) that the grantor intended to transfer the water shares to the grantee. The court determined that the deed from the Trust to Brough Properties, which included "all water rights," was ambiguous about whether the Trust intended to transfer the water shares -- particularly because the court noted that there is a difference between water rights and water shares. The court also noted that there was sufficient evidence that the Trust did not intend to transfer the water shares to Brough Properties, including evidence that Robert had transferred water shares separate from land in the past and also transferred land without water shares. Based on these determinations, the court held that the daughters (and not the Zundels) were the legal owners of the water shares.
It should be noted that this decision has limited applicability because in 2013, the Utah legislature modified the law to make it more clear that water shares are not appurtenant to land.
To read the full text of the opinion, click here.
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