Texas Bank Trust Co. of Beaumont v. Smith

192 S.W. 533, 108 Tex. 265, 2 A.L.R. 771, 1917 Tex. LEXIS 73

• Court: Texas Supreme Court
• Decided: February 28, 1917
• Docket: No. 2467.
• Status: Published

Opinion

Mr. Chief Justice PHILLIPS

delivered the opinion of the court.

The case presents a controversy between an irrigation company, certain landlords, and a mortgagee with respect to the existence and priority of the lien claimed by the irrigation company.

In the year 1909 one George W. Smith was in possession of certain lands leased by him from the owners, using the same for a rice farm. To successfully grow rice on the land irrigation was necessary, and the only water accessible for the purpose was that from the canals of the irrigation company. In July of 1909 Smith entered into a contract with the irrigation company, by the terms of which water for irrigation purposes was to be furnished him by the company for an agreed price. Prior to the making of this contract Smith had executed a mortgage to a banking company to secure the payment of money loaned him to be used in growing the rice crop. This mortgage was duly registered before the irrigation contract was made. The owners of the land knew at the time their leases were made to Smith that his purpose was to cultivate the land in rice, as did also the banldng company at the time it took its mortgage.

Default having been made by Smith in the payment of rent due by him for some of the land, the owner of such land, one of the landlords, filed suit for the rent due and for foreclosure of the landlord’s lien upon the crop of rice thereon grown. Afterwards the irrigation company filed a separate suit seeking the recovery of the amount due by Smith under the water contract and a foreclosure of a lien upon the entire crop. The two suits were consolidated. The banking company intervened, setting up its mortgage lien, as did also the other landlords asserting their landlord’s liens.

The questions propounded by the honorable Court of Civil Appeals are as follows:

“1. Smith being a lessee, and not the owner of the land, and the contract for water having been made with him and not with the land owners, did. the irrigating company, by its contract made with Smith and by furnishing water for the irrigation of the crops in pursuance thereof, acquire a lien on the crops so irrigated by virtue of the provisions of article 3130 of Sayles’ Civil Statutes?

“2. If the foregoing question is answered in the affirmative, then we ask, was such lien superior to the mortgage lien of the Texas Bank & Trust Company, and to the liens of the land owners for the rents of their lands ?”

The statute in force in 1909 with respect to the lien of an irrigation company upon crops grown on land for the irrigation of which it had furnished water, was in these words:

“Every person, corporátion or association of persons which has heretofore constructed or which may hereafter construct any ditch, canal, dam, lake or reservoir for the purpose of irrigation, and who shall lease or rent the water, from said ditch, canal, dam, lake or reservoir to any person or association of persons or corporation owning any lands subject to irrigation from any such' ditch, canal, lake, dam or reservoir, such person, corporation or association of persons owning such ditch, canal, lake, dam or reservoir shall have a preference lien, superior to every other lien, upon the crop or crops raised upon the land thus irrigated under such lease or contract.” Act of 1895, sec. 18 (General Laws of 1895, p. 25); art. 3130, Sayles’ Civil Statutes of 1897; art. 5009, Bev. Stats., 1911.

The term “owner,” as generally used, signifies one who has the legal or rightful title. But this is not always the sense in which it is employed. It is not rigid in meaning, and in statutes is not infrequently used to denote one holding for himself and in his own right but having less than an absolute title. Its meaning depends in a great measure upon the context and the subject matter to which it is applied. Thus in statutes defining duties of railroads and denouncing a penalty against the corporation “owning the railroads,” or exacting certain requirements of the companies “owning the tracks,” the corporation in control of and operating the railroad, though simply a lessee of the' property, is an “owner” within the meaning of such statutes. State v. St. Louis & S. F. R. R. Co., 46 Mo. App., 466; Baltimore & O. R. R. Co. v. Walker, 45 Ohio St. Rep., 577, 16 N. E., 475; Chicago, R. I. & P. Ry. Co. v. State, 84 Ark., 409, 106 S. W., 199. In an action to recover the possession of real estate, to maintain which only a possessory title was necessary, a tenant for years properly alleged himself to be “the owner” of the real estate. Parker v. Railroad Co., 79 Minn., 372, 82 N. W., 673. Other cases illustrating like uses of the term are Schott v. Harvey, 105 Pa., 222; Camp v. Rogers, 44 Conn., 291; Peterson v. Johnson, 132 Wis., 280, 111 N. W., 659. The last case concerned a statute imposing the duty on “the respective occupants of adjoining lands, used and occupied for farming purposes,” of maintaining partition fences, unless they should otherwise mutually agree. It then provided: “And owners of lands who do not maintain and keep in repair lawful partition fences shall not be entitled to recover any damages whatever for trespasses by the animals of owners of any adjoining lands with whom partition fences might have been maintained if such lands had been inclosed.” The word “owners” as used in the quoted part of the statute was held to include persons designated by the word “occupants” in the preceding part.

That the term may signify one whom the owner of the title has clothed with the possession and control, is recognized by this court. In the opinion of Chief Justice Stayton in Turner v. Cross and Eddy, Receivers, 83 Texas, 318, 15 L. R. A., 363, 18 S. W., 578, in speaking of the terms “owner” and “proprietor,” this is said:

“Both words are doubtless often used to express right to property in a thing less than absolute or exclusive right, but when this occurs it will ordinarily appear from the context, and in all such cases the person holds for himself and in his own right; and as stated in brief of counsel, The right of such a person to the possession and control springs not from an act to which the concurrence or consent of the owner is not required, as in the appointment of a receiver, but from the direct act of the owner or proprietor, who thereby clothes the person placed in the possession and control with the right to operate the same for his own benefit/ ”

The sense in which the term “owning” was used in that part of the statute under consideration which requires that the lease of water be to one “owning” the lands to be irrigated, in order for the irrigation company to have the statutory lien upon the crops thereon grown, can not be accurately determined without consulting the context of the act of which the statute was a part. As already noted, the statute was section 18 of the Act of 1895. Section 11 of the Act as amended at the same session (General Laws of 1895, page 37; art. 3135, Sayles’ Civil Statutes of 1897), throws a distinct light upon the question, since it is the part of the act which deals with the duties of irrigation companies chartered under it or the general laws, defines the classes of water rights which may he sold or leased, and designates those entitled to obtain them.

After authorizing the formation of corporations with the powers conferred by the Act, this section declares:

“All such corporations shall have full power and authority to make contracts for'the sale of permanent water rights, and to have the same secured by liens on the land or otherwise, and to lease, rent or otherwise dispose of the water controlled by such corporation for such time as may be agreed upon, and in addition to the lien on the crops hereinafter provided for, the lease or rental contract may be secured by a lien on the land or otherwise.”

This is a general provision designating the kinds of water rights which irrigation companies may grant to consumers. They are of two distinct classes, permanent water rights, and those of a limited duration. This distinction is" important, and materially aids in the interpretation of section 18. Permanent water' rights, this provision contemplates, aré to be sold. Other water rights are to be leased or rented. The former are to be evidenced by contracts of sale; the latter by contracts of lease. With whom are such respective classes of contracts to be entered into, and how are they to be secured ? Contracts for the sale of permanent water rights are to be made, of course, with the owner of the title to the land. As to their security, it is declared that they may be secured by liens on the land, which could be validly given only by an owner of the title, or by means of other security. As to lease contracts, no limitation, whatever, is imposed in respect to the classes of persons with whom they may be made. The authority to make such contracts is conferred in the broadest terms. There is no hint in the provision of a power to make them with only the owner of the title to the land, to the exclusion of a tenant in rightful control and possession who might need the water for his use. Its language, as well as the spirit of the act, repudiates the view that a tenant in possession is to be dependent upon the owner of the title for his water supply, wholly deprived of the right to contract for it, and altogether excluded from the benefits of the act unless the owner of the title sees fit to lease the water • necessary for his use. The only reasonable construction of this provision is that it authorizes the making of lease contracts with either a tenant in possession or the owner of the title.

What security does the act provide for this class of contracts ? The answer to this inquiry is to be found both in the provision above quoted and in section 18, constituting the statute under consideration, since both relate to this same subject and by direct reference one is substantially made a part of the other. The above provision recognizes and declares that such contracts are to be secured, primarily, by the statutory lien upon the crops conferred by section 18, though providing that they may be additionally secured by a lien on the land or otherwise. Its language is that they, “in addition to the lien on the crops hereinafter provided for,-—(the lien conferred by section 18), may beseemed by a lien on the land, etc.” The express lien upon the land for the security of such contracts could be validly given only by the owner of the title. But was the statutory lien upon the crops when grown by a tenant in possession to be dependent in all cases upon the existence of a water lease contract with the owner of the title? To so assume is either to introduce a conflict between section 18 and the provision above quoted, or to impose a limitation upon the latter not expressed, and which the generality of its terms excludes. The construction to be given the provision' quoted in respect to, the persons with whom the making of lease contracts is authorized, is, as already stated, that they may be made with either a tenant in possession, or the owner of the title. It expressly declares that the security for such contracts shall be, primarily, the statutory lien upon the crops conferred by section 18. TJnder this provision, therefore, such contracts-would stand so seemed, whether entered into either by a tenant in possession or the owner of the title. To construe section 18 as meaning that they are to be secured by the statutory lien only when made with the owner of the title would, accordingly, contradict the plain intendment of the above provision. In the construction of the two provisions they are to be harmonized, if their terms reasonably admit of it, so that both may be given consistent effect. This may be done only by either assuming that in authorizing the making of lease contracts the Legislature intended they should be made with only the owner of the title, thus depriving a tenant in possession of all right in his own behalf to contract for and obtain water for his use, and placing his right to water at the entire disposal of his landlord,—a construction not only opposed by express provisions of the act, as will be later shown, but which would subject the tenant to an injustice that it is not reasonable to believe the Legislature intended, or construing the word “owning,” used in section 18, in its broader sense, and as, therefore, including a tenant in rightful control and possession of the land. The term in legal effect admits of that construction, and as used in this statute such meaning should be given it.

It is difficult to believe that since the Legislature in conferring the authority for the making of lease contracts did not limit its exercise to only the owner of the title, its purpose was, nevertheless, to confine the benefits of the statutory lien provided for their security to only such as an owner of the title might make. It is more reasonable to conclude that the intention was that the lien thus furnished for this class of contracts should apply to all authorized contracts of the class.

That the Act, in terms, authorizes the making of such contracts directly with the owner of only a possessory title to the land, as dis; tinguished from an owner of the absolute title, and declares it to be the duty of irrigation companies to furnish such an owner water in his own right, is shown by this further provision of amended section 11:

“All persons who own or hold a possessory right or title to land adjoining or contiguous to any canal, ditch, flume or lateral constructed and maintained under the provisions of this chapter, and who shall have secured a right to the use of water in said canal, ditch, flume, lateral, reservoir, dam or lake, shall be entitled to be supplied from such canal, ditch, flume, lateral, dam or lake with water for irrigation of such land, and for mining, milling, and stock raising in accordance with the terms of his or their contract.”

The declaration that the owners of a possessory title to land adjoining any canal, etc., who shall have secured the right to the use of water in the canal, shall be entitled to be supplied with water “in accordance with the terms of his or their contract” could reasonably contemplate nothing less than their right to make such contracts for themselves.

It thus also appears that in this part of the act the holder of only a possessory right to the land is recognized as the "owner” of a species of title. This serves to explain the meaning of the term “owning” in section 18. It is not to be assumed that the term was used in the latter section in a sense wholly different from that in which it .was employed in another section of the identical act with reference to the same subject matter. The more reasonable view,—and such is a primary rule of construction, is that it was used in a ponsistent sense in both sections.

The second question is settled by the statute. It declares that the lien it provides shall be “superior to every other lien.” All liens for which the law then made provision must have been taken into account in the enactment of the statute. Being the later act, this declaration could only mean that all such statutory liens should be subordinate to the lien which it was the purpose of the act to confer, whether in force or not when, the latter attached. As to the landlord’s lien, this is necessarily true as applied to a, water lease contract made with a tenant. In no case could such a contract be well made with the tenant until he had acquired his right to the land by lease from its owner, which, as a rule, marks also the time of the creation of the rental indebtedness and, accordingly, the inception of the landlord’s lien. To hold that the existence of the landlord’s lien renders inferior the irrigation company’s lien, would make meaningless the declaration of the statute that the latter shall be “superior to every other lien.”

As applied to contract liens, this is also true. Such liens subsequently created would, without this declaration, be subordinate because inferior in point of time. With respect to contract liens, therefore, this declaration is without force unless it has reference to those in existence when the lien of the statute accrues.

Ordinarily, a statutory lien will not be given precedence over an existing and duly registered lien. But there is no question as to the power of a Legislature to give a statutory lien such priority where its object is to secure a charge necessary for the preservation of the property. Jones on Chattel Mortgages, sec. 474.

An instance of liens having this priority, independently of any statute provision, is the maritime lien upon vessels for repairs necessary to maintain their seaworthiness. The expenditure for such repairs inures to the benefit of the mortgagee, and is as much to his advantage as to the mortgagor. For this reason the mortgage lien, though prior in time, is made subordinate. Scott v. Delahunt, 65 N. Y., 128; Provost v. Wilcox, 17 Ohio St., 359; Hammond v. Danielson, 126. Mass., 294.

For a stronger reason should the lien conferred by the statute under consideration be held superior to a prior mortgage lien. It is to secure indebtedness for the water which helps to create the property upon which .the mortgage lien is given, without which the property might not have existence. The theory of the statute is that holders of prior liens upon the crops to be grown on the irrigated land are not prejudiced, but aided by the furnishing of the water necessary to their growth. It is for this reason, plainly, that the lien to secure the water charges is given its superior rank.

Cases holding that a lien upon property subsequently moved on rented premises is superior to the landlord’s lien, furnish no analogy, and do not control the question. In such instances the tenant’s indebtedness for rent due the landlord lias no possible relation to the preservation of the property, and, consequently, there could be no reason for holding that it was the purpose of the Legislature to displace the existing lien.

Ror does the decision in Blackford v. Ryan, 61 S. W., 161, by the Court of Civil Appeals for the Fifth District, have any bearing upon' the question. It was decided there that the lien given by article 3319, Revised Statutes of 1895, to a livery stable keeper for the care of a horse was subordinate to an existing mortgage lien, duly registered at the time the horse was placed in the stable. That article gave merely “a special” lien upon animals fed and cared for in such stables. It contained no declaration that it should be “superior to every other lien.” In addition, it was provided by article 3326 of the same title: “Rothing in this title shall be construed or considered as in any manner impairing or affecting the right of parties to create liens by special contract or agreement, nor shall it in any manner affect or impair other liens arising at common law or in equity,, or by any statute of this State, or any other lien not treated of under this title.” The latter article would alone serve to maintain the priority of the existing mortgage in such a case. Masterson v. Pelz, 86 S. W., 56.

Both questions are answered in the affirmative.