Opinion of the Court-Budge, C. J., Dissenting.

It is unnecessary for us to consider the validity of the water right notice and claim posted by Horton on March 28, 1900, or of the subsequent steps taken by him under that notice in his endeavor to comply with the law. The actual diversion and application of the water had preceded that date, and it therefore becomes unnecessary for us to consider the steps taken in regard to the posting and recording the notice and the prosecution of work thereafter."

The facts in the present case are sufficient to indicate the amount of land settled and occupied by the Taylors, which, from the evidence, it clearly appears they intended to reclaim and irrigate by the application of water, which was actually appropriated and diverted to the point of intended use sometime during the season of 1908. The evidence shows that the ditch was designed to carry the water from their point of diversion to and upon their lands, and that it was completed that season, and that its capacity was adequate to carry water sufficient for the irrigation of all of the lands in question. The evidence further shows that the Taylors have proceeded with reasonable diligence in the application of this water upon their land to a beneficial use in the reclamation thereof. Of all of these facts the Blaine County Irrigation Company had actual notice at the time it secured its permit from the state engineer in October, 1910.

All of the facts and circumstances in evidence clearly show that the Taylors have brought themselves well within the rule governing appropriation for future needs. To hold otherwise would amount to overruling a long line of harmonious decisions governing such property rights in this state and would abrogate a rule of law which is well settled in all of the arid states.

For the reasons herein expressed I am unable to concur in the majority opinion upon this phase of the case.

Argument for Appellant.

(April 3, 1917.)

SAMUEL IRETON and ALEXANDER IRETON, Respondents, v. IDAHO IRRIGATION COMPANY, LIMITED, a Corporation, Appellant.

[164 Pac. 687.]

IRRIGATION AND WATER RIGHTS

GAGES PRIORITY.

REAL PROPERTY-LIENS AND MORT

Where a Carey Act construction company enters into a contract with a desert land entryman, whereby it furnishes water to him which is based upon, and the right to the use of which becomes appurtenant to, the land, and issues to him shares of stock in an operating company which it is intended shall ultimately become the owner of the irrigation system, and retains possession of the shares as security for the payments to be made therefor, but does not record the contract, and the entryman afterward mortgages the land to a third party who, without actual notice of any lien or claim of the construction company, acquires such mortgage and records it, the lien created by the mortgage attaches to the water right and to the shares of stock, and is superior to the lien or claim of the construction company.

[As to mortgage as "security," see note in Ann. Cas. 1914D, 625.]

APPEAL from the District Court of the Fourth Judicial District, for Gooding County. Hon. James R. Bothwell, Judge.

Action to foreclose real estate mortgage. Judgment for plaintiffs. Affirmed.

Oppenheim & Hodgin and Longley & Walters, for Appel

lant.

Carey Act operating companies are mutual irrigation companies, and each share of stock represents the interest that the holder thereof has in such corporation. (Hobbs v. Twin Falls Canal Co., 24 Ida. 380, 133 Pac. 899.)

Certificates of stock are simply the muniments and evidence of the holder's title to a given share in the property and franchises of the corporation of which he is a member. (4 Thompson on Corp., 2d ed., secs. 3455-3465.)

Argument for Respondents.

Shares of stock in an irrigation company are personal property under sec. 2747, Rev. Codes. (Watson v. Molden, 10 Ida. 570, 79 Pac. 503.)

Shares of stock in an irrigation company are not appurtenant to the land owned by the owner of such shares. (Wells v. Price, 6 Ida. 490, 56 Pac. 266.)

The settlers' contract is in the nature of a conditional sale, and the title to the water does not become vested in the entryman until the purchase price thereof is paid. (Bennett v. Twin Falls North Side Land & Water Co., 27 Ida. 643, 150 Pac. 336.)

Where a transaction gives one party inequitable advantage over the other, equity will often interfere in behalf of the injured party, and equity has at times impressed liens in absence of expressed contract, and contrary to the rules of law. (Clapp (Clapp v. Maurer, 94 Kan. 549, 146 Pac. 1156.)

Richards & Haga, McKeen F. Morrow and Marvin C. Hix, for Respondents.

Water rights sold by a Carey Act construction company are not personal property, for they "embrace a proportionate interest in the canal or other irrigation works, together with all the rights and franchises attached thereto." (Sec. 1615, Rev. Codes; State v. Twin Falls Canal Co., 21 Ida. 410, 121 Pac. 1039; State v. Twin Falls Canal Co., 27 Ida. 728, 151 Pac. 1013.)

The construction company serves only as a conduit for transferring the right to the use of water from the state to the settler, and the operating company is merely a trustee for the settlers and owners of the water rights, and the interest of the water user is realty, for it is an undivided and proportionate interest in the irrigation system, water rights and appropriations. (Idaho Irrigation Co. v. Lincoln County, 28 Ida. 98, 152 Pac. 1058; Bennett v. Twin Falls North Side L. & W. Co., 27 Ida. 643, 150 Pac. 336; Berg v. Yakima Valley Canal Co., 83 Wash. 451, 145 Pac. 619, L. R. A. 1915D, 292; In re Estate of Thomas, 147 Cal. 236, 81 Pac. 539.)

Argument for Respondents.

The nature of the water right acquired by a settler under a Carey Act project is determined by the statutes and not by the certificate of stock in the operating company. Such cer

tificate is merely convenient evidence of the number of water rights or shares in the system owned by the settler. Upon the purchase of the water rights, they become appurtenant to the land, and the transfer of the land operates as a transfer of the water rights, and the possession of the stock certificates by one who does not own the land therein described and to which the water has been made appurtenant will not entitle the holder of such certificate to water thereunder for use upon other lands. (Kinney on Irrigation, 2d ed., sec. 1484; Wiel on Irrigation, 3d ed., sec. 1269.)

By the constitution, statutes and decisions of this state, even water rights outside of Carey Act projects are appurtenant to the lands to which the water is applied. (Paddock v. Clark, 22 Ida. 498, 126 Pac. 1053; Russell v. Irish, 20 Ida. 194, 118 Pac. 501; Taylor v. Hulett, 15 Ida. 265, 97 Pac. 37, 19 L. R. A., N. S., 535; Hall v. Blackman, 8 Ida. 272, 68 Pac. 19; Stanislaus Water Co. v. Bachman, 152 Cal. 718, 93 Pac. 858, 15 L. R. A., N. S., 359.)

Record title and possession constitute complete indicia of absolute ownership, and the law does not require a purchaser or encumbrancer to make further inquiry. (Quick v. Milligan, 108 Ind. 419, 58 Am. Rep. 49, 9 N. E. 392; Blight v. Schneck, 10 Pa. St. 285, 51 Am. Dec. 478; Hubbard v. Greeley, 84 Me. 340, 24 Atl. 799, 17 L. R. A. 511; 24 Am. & Eng. Enc. Law, 187; 34 Cyc. 614.)

When one of two innocent persons-that is, persons each guiltless of an intentional moral wrong-must suffer a loss, it must be borne by that one of them who by his conduct, acts or omissions has rendered the injury possible. (Pomeroy's Eq. Jur., 2d ed., sec. 803; Quick v. Milligan, supra; Blight v. Schenck, supra; Hubbard v. Greeley, supra; Pennypacker v. Latimer, 10 Ida. 618, 81 Pac. 55; Schultz v. McLean, 93 Cal. 329, 28 Pac. 1053; Noble v. Moses, 74 Ala. 604.)

Opinion of the Court-Morgan, J.

MORGAN, J.-On December 21, 1911, Robert Lansdon and his wife executed and delivered their promissory note for $2,000 to Boise Title & Trust Company, and, on the same day, to secure the payment thereof, executed and delivered to that company a mortgage upon 160 acres of land in Gooding county, together with any and all water rights owned by the mortgagors or belonging to or connected with the premises. The mortgage was duly recorded on January 8, 1912, and on March 13th of that year, and prior to the maturity of the note, was sold, and assigned, together with the indebtedness thereby secured, to respondents who have commenced this action to foreclose it.

Appellant, a Carey Act construction company, entered into a contract with the state of Idaho to construct an irrigation system in the counties of Blaine and Lincoln, out of a portion of which latter county the county of Gooding has been created, for the purpose of watering lands entered under the Carey Act. The contract provided that appellant should sell to entrymen water rights and shares of stock in the Big Wood River Reservoir & Canal Company, Limited, a corporation to be formed by it, in order to facilitate the transfer of the ownership and control of the system to purchasers of water rights and for their convenience, when they shall have acquired the system, in its management and control and in the distribution. of water therefrom to their lands according to their respective interests. The shares were to represent a proportionate interest in the irrigation works, one share to be issued for each acre of land to be irrigated. The land in question was not Carey Act land, but was acquired by Lansdon under the desert land laws of the United States and is adjacent to the Carey Act segregation of appellant and capable of being irrigated only by its system.

On April 1, 1910, appellant and Lansdon entered into a written agreement, whereby the latter purchased a certain number of shares in the canal company, each share entitling him to one-eightieth cubic-foot of water per second and a proportionate interest in the system. The contract provided that in case of default in the payment of any instalment of