Can commercial water storage easements be transferred to new owners? Johnson v. Higley Explained

The Utah Court of Appeals addressed whether a commercial water storage easement could be transferred to new parties and whether subsequent property purchasers could claim protection under the recording statute in Johnson v. Higley.

Background and Facts

The Johnson brothers inherited property adjacent to land containing Blue Lakes reservoirs. In 1946, the reservoir property owners granted Paul Wrathall perpetual, unconditional easements to store water in the Blue Lakes. Wrathall later conveyed a half-interest in the easement to the Johnsons’ father, Maxwell Johnson, though this deed wasn’t recorded until 1995. When the Higleys purchased the reservoir property in 1990, they interfered with the Johnsons’ water storage and caused flooding on the Johnson property.

Key Legal Issues

The court addressed whether the water storage easement was appurtenant or in gross, whether a commercial easement in gross could be transferred, and whether the Higleys were protected as bona fide purchasers under Utah’s recording statute given that the Johnson deed was unrecorded when they purchased the property.

Court’s Analysis and Holding

The court determined the original Wrathall deeds created a commercial easement in gross because they granted unconditional water use rights without tying the easement to any particular piece of land. The deeds authorized storage “or other use of said water” without specifying where or how the water would be used. Because the easement was commercial in nature—used for crop irrigation and cattle watering rather than personal satisfaction—it was fully transferable under Utah law.

Regarding the recording statute defense, the court found the Higleys had constructive notice of the easement through the recorded Wrathall deeds and a duty to inquire further. The Higleys observed the Blue Lakes, dikes, and irrigation ditches during their property inspection, which combined with knowledge of the recorded easements should have prompted inquiry about the Johnsons’ potential interests.

Practice Implications

This decision reinforces that commercial easements in gross are transferable property interests, unlike personal easements that cannot be separated from the dominant estate. Property purchasers cannot rely solely on the absence of recorded assignments when the original recorded easements expressly permit transfer to “assigns.” Due diligence must include inquiry of neighboring landowners and apparent easement users when purchasing encumbered property to avoid constructive notice issues under Utah’s recording statute.