7776

• UCREFRP Catalog Number: 7776
• Author: Paddock, W. A. and W. C. Weiss.
• Title: A Primer on Colorado Water Law.
• USFW Year: 1986.
• USFW - Doc Type: \
• Copyright Material: NO

shareholders arises out of contract, implied in the subscription
for stock and construed by the provisions of a charter or arti-
cles of incorporation. The articles of incorporation set forth
the express purposes which the corporation undertakes to carry
out. The corporation-is not only obligated to furnish a proper
proportion of water to each of its shareholders, but is liable
for failure to do so. The corporation must preserve and protect
the interests of the shareholders by keeping the ditches, canals,
reservoirs and other works in good repair, the expense of which
is paid from the special assessments.
The shares of stock in a mutual ditch represent the consumers'
interest in the reservoir, canals, ditches and water rights. The
benefit derived from such stock is the right to the exclusive use
of the water it represents, the water being divided pro-rata ac-
cording to the number of shares held by each shareholder. Share-
holders, not the corporation, are the real parties in interest in
any condemnation action.
Shareholders have the right to change the place of use of their
water so long as others are not injured. However, a reasonable
ditch company by-law precluding transfer without consent of the
board of directors, in existence at the time the stock was ac-
quired, may be upheld to prohibit transfer of the water without
board consent.87/ Alternatively, a by-law adopted after purchase
of the stock at issue, purporting to prevent transfer of the wa-
ter without consent of the board of directors, was found to be
arbitrary and capricious action.88/ Thus, prior to purchase of
any stock in a mutual ditch company, the by-laws of the company
ought to be examined for restrictions incompatible with the in-
tended use of the water.
Water rights are real property and are to be transferred by deed.
Shares of stock are personalty and should be conveyed by assign-
ment. To effect a transfer of stock in a mutual ditch company it
is necessary to have the name of the owner changed in the books
of corporation. The safest approach in conveying such rights is
to do all three.
IV. GROUND WATER
The 1980 primer stated:
Colorado divides the world of ground water
into three parts, tributary ground water,
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