PACIFIC MILLS ACQUISITION LLC v. ESSEX COMPANY and LAWRENCE HYDROELECTRIC ASSOCIATES

In this case, the court must decide whether plaintiff Pacific Mills Acquisition LLC (“Pacific Mills”) has rights to draw water from the Merrimack River, to power a facility on Pacific Mills’ riverside property; whether plaintiff’s predecessor validly assigned the disputed water power rights to defendant Lawrence Hydroelectric Associates (“LHA”), or if plaintiff continues to hold those rights; and whether Pacific Mills can, as a matter of law based on the summary judgment record before the court, defeat a claim that plaintiff is liable for the passage onto its site of water to which plaintiff is not entitled.

I. FACTS

The summary judgment record establishes the following facts, without material dispute.

In 1845, the legislature chartered the Essex Company (“Essex”) to build a dam and canals on the Merrimack River in Lawrence, Massachusetts. See St. 1845, c. 163. Essex’s charter authorized it to “create a water power to use, or sell, or lease to other persons or corporations, to use for manufacturing and mechanical purposes.” Id. Essex constructed a dam across the river; Essex also dug two canals, the North Canal and the South Canal, on the Merrimack, directly alongside, and generally parallel to, the main course of the river. Essex established this nineteenth century system to harness the power of the Merrimack; the river’s water flows either over the dam, or into one of the canals. Water “drops” when it flows from a canal back into the river; the canals as constructed are at an elevation higher than the river. Hydraulic power, the rights to some of which are the subject of the parties’ dispute, can be generated at any point where water drops.

When Essex constructed the dam, Essex owned contiguous tracts of land on each side of the river upstream and downstream from the dam. As “the owner of the entire water power development with contiguous land,” Essex “had the right to carve its property by selling fractional parts as sites for mills with power rights appurtenant and by retaining other parts upon which are located the dam and canals.” See Essex Co. v. Lawrence, 214 Mass. 79 , 89 (1913).

In 1846, the Essex Company adopted certain “Proposals By The Essex Company For The Sale Of Their Mill Power And Land, On Merrimack River In Massachusetts.” [Note 1] The first paragraph of the Proposals states, “The Essex Company propose to sell their mill powers situated near Andover Bridge on Merrimack River on the following terms and conditions to be varied as the parties may agree in the deed. For the price that may be agreed upon they will grant a parcel of land to be described in the deed, with one or more mill powers of the quantity of water described below, and with the covenants contained in the annexed deed.” The Proposals describe a “mill power” as “the right to draw from the nearest canal or water course of the grantors and through the land to be granted so much water as shall give a power equal to thirty cubic feet of water per second when the head and fall is twenty five feet; and no more is to be drawn in any one second, nor is the same to be drawn more than sixteen hours in each day of twenty four hours[.]”

Plaintiff’s chain of title has its relevant start with a series of conveyances of riverfront land made by Essex, pursuant to the Proposals, beginning in or around 1864. These conveyed parcels are known as the Pacific Mills Lower Site or the Lower Site. By indenture dated March 18, 1864, and recorded in Book 664, Page 44, Essex conveyed to a company called Pacific Mills (“Original Pacific Mills”), [Note 2] “a parcel of land with six mill powers.” Along with the land, Essex conveyed a “right of way in common with others” over a twenty-five-foot strip of land running from the conveyed parcel to the southerly wall of the North Canal, and the right “forever to have & maintain covered flumes through or across the said strip of land together with six mill powers[.]”

By indenture dated June 6, 1864, and recorded in Book 670, Page 57, Essex conveyed to Original Pacific Mills two mill powers “to be used upon, and as appurtenant to, the land heretofore granted.” The previously conveyed land referenced is the land described in the March 18, 1864 indenture. No additional land was conveyed on June 6, 1864. Similarly, in an indenture dated October 1, 1869, and recorded with Essex North [Note 3] in Book 3, Page 363, Original Pacific Mills received from Essex three more mill powers “to be used upon, and as appurtenant to, the land heretofore granted.” Between 1874 and 1908, Essex conveyed to Original Pacific Mills two additional parcels in separate duly recorded deeds. Each conveyance was made part of the Lower Site and “as if” part of the original conveyance of March 18, 1864.

Meanwhile, Essex was conveying land and mill powers to other mill owners along the North Canal. One such mill, the Atlantic Cotton Mill (“Atlantic”), came to own two parcels of land along the Merrimack (and twenty-two mill powers). [Note 4] By deed dated March 31, 1913, and recorded in Book 328, Page 310, Atlantic conveyed to Original Pacific Mills the land constituting the Atlantic Cotton Mills site along with “all water powers, mill powers and mill privileges.” This, coupled with an additional 1913 conveyance from Essex to Original Pacific Mills, caused Original Pacific Mills to hold title to the entire Atlantic Cotton Mills site and the twenty-two mill powers associated with that site.

In an indenture dated December 7, 1939, recorded at Book 627, Page 226, Original Pacific Mills transferred the twenty-two Atlantic Cotton mill powers to the Original Pacific Mills Lower Site. To accomplish this, Original Pacific Mills transferred [Note 5] the twenty-two Atlantic Cotton Mills mill powers back to Essex. Essex then granted the same twenty-two mill powers back to Original Pacific Mills “to the same effect in all respects as though . . . said mill powers had been granted” in and by the three indentures recorded in 1864. As a result of this transaction (“1939 Transaction”), Original Pacific Mills now had thirty-three mill powers associated with the Lower Site, the Pacific Mills Property.

Original Pacific Mills transferred the Lower Site, along with the thirty-three mill powers, to Twindustries, Inc., in 1957. Twindustries, Inc. became Rowland Industries, Inc., and by 1970, the Lower Site came to be owned by the Rowland Industries Real Estate Trust (“Rowland Industries” or “Rowland”).

In the late 1970s, LHA began acquiring mill powers; LHA’s goal was to use the water energy of the Merrimack to operate a hydroelectric power plant. LHA acquired mill powers from various mill sites by assignment. In 1978, LHA and Rowland Industries executed an instrument titled “Assignment of Mill Powers and Other Rights” (“LHA Assignment”). The LHA Assignment provides that, in exchange for LHA’s agreement to pay the “perpetual annual rent[s]” otherwise due from Rowland to Essex in keeping with the original documents, Rowland was assigning to LHA its thirty-three mill powers for a term of fifty years, renewable at LHA’s option for an additional twenty-five years. The LHA Assignment describes the hydroelectric project and LHA’s plan to use the acquired mill powers for that purpose. The LHA Assignment provides that it “evidence[s] the transfer and lease of [the] Mill Powers and other water rights to LHA, with LHA assuming all ... present rental obligations to Essex Company....” Essex is a signatory to the LHA Assignment, as it appears it was to each of the parallel instruments entered into with other mill site owners to consolidate the mill powers in LHA. The LHA Assignment is recorded at Book 1363, Page 96.

By May of 1979, as a result of its campaign to gather together the distributed mill powers, LHA had the right to use 133 and one-half of them. LHA acquired 115 and one-third mill powers by assignments of the powers from thirteen different mill sites, and eighteen and four-fifteenths mill powers as appurtenant to the land they acquired on the South Canal. This was consistent with the LHA Assignment, which contemplated that LHA would use “substantially all of the fall of the water impounded by the dam” to “manufacture and sell electricity.” Power generation at the LHA plant commenced in 1981. The intake structure for the LHA hydroelectric plant is located adjacent to the South Canal. Water flows through the South Canal entrance to the intake structure for the LHA plant.

Rowland Industries dissolved in 1984. The Pacific Mills Property was conveyed to the Trustees of the 300 Canal Street Trust by deed dated March 7, 1985 and recorded in Book 1954, Page 283. This deed contains a reference to the LHA Assignment. It reads, with emphasis added,

Said mill powers are further described in “Proposals by the Essex Company for the Sale of their Mill Powers and Land, on Merrimack River, in Massachusetts” hereinafter called “Proposals,” attached to or referred to in said Indentures and deeds. See also Essex Company grant recorded in North Essex District Registry of Deeds Book 1363, Page 96 and Reservation of Rights recorded in Book 1762, Page 229. As stated, the LHA Assignment is the instrument recorded at Book 1363, Page 96.

On or about August 27, 1985, the Trustees of the 300 Canal Street Trust granted a mortgage on the Pacific Mills property to Home Owners Federal Saving and Loan Association. The mortgage agreement, duly recorded, contained the same reference to LHA Agreement as found in the 1985 deed. The mortgage was assigned four times, and each assignment was duly recorded. Pacific Mills, plaintiff in this action, was the fourth assignee. Pacific Mills took possession of the property pursuant to a February 25, 1999 Certificate of Entry to Foreclose.

II. PROCEDURAL HISTORY

Pacific Mills filed its complaint on April 4, 2004, seeking (1) declaration that it owns and controls thirty-three mill powers “appurtenant to its ownership of certain real property,” namely, the Pacific Mills Lower Site; (2) declaration that Essex is obligated to maintain the north canal from which Pacific Mills has the right to draw water pursuant to its mill powers; and (3) specific performance by Essex of its obligation to maintain the north canal.

The defendants filed a counterclaim on December 30, 2004, seeking (1) that, to the extent Pacific Mills holds any right, title or interest in any mill powers and is therefore violating the terms of the mill powers by committing waste, Pacific Mills be enjoined from continuing such waste; (2) a right of entry upon the Pacific Mills Property to seal the penstocks; and (3) declaration that, pursuant to the LHA Assignment, Pacific Mills has no right to use any mill powers nor right to demand that Essex perform any duty alleged under the mill powers.

On May 11, 2007, Pacific Mills moved for summary judgment on Count I of its complaint, Counts I and II of the defendants’ counterclaims, and as to paragraphs 35-37 of Count III of defendants’ counterclaims. On July 25, 2007, defendants filed opposition to plaintiff’s motion, and a cross-motion for summary judgment as to Count I of the plaintiff’s complaint (which was recast and filed finally on March 31, 2008).

In addition to arguing that the LHA Assignment is valid on its face, the defendants advance the alternative theory that the LHA Assignment is enforceable as an equitable servitude or an easement by estoppel. The defendants also mount a collateral attack on plaintiff’s Count I, seeking to prevail on their cross motion because (1) the statute of limitations bars Pacific Mills’s claim, (2) Pacific Mills lacks standing to enforce what are essentially Essex’s rights, (3) Pacific Mills’s claim is barred by waiver, laches, and estoppel.

During the litigation, Pacific Mills filed six separate motions to strike various portions of affidavits submitted by the defendants. These motions are also before the court.

After hearing on the cross motions for summary judgment, the court took the motions under advisement, and now decides them.

III. DISCUSSION

“Summary judgment is granted where there are no issues of genuine material fact, and the moving party is entitled to judgment as a matter of law.” Ng Bros. Constr. v. Cranney, 436 Mass. 638 , 643-644 (2002); Mass. R. Civ. P. 56 (c). “The moving party bears the burden of affirmatively showing that there is no triable issue of fact.” Ng Bros., 436 Mass. at 644. In determining whether genuine issues of fact exist, the court must draw all inferences from the underlying facts in the light most favorable to the party opposing the motion. See Attorney General v. Bailey, 386 Mass. 367 , 371, cert. den. sub nom. Bailey v. Bellotti, 459 U.S. 970 (1982). Whether a fact is material or not is determined by the substantive law, and “an adverse party may not manufacture disputes by conclusory factual assertions.” See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Ng Bros., 436 Mass. at 648.

A. The Mill Powers

There is no dispute that the mill powers at issue in this case are easements; mill powers, including the very mill powers at issue in the pending litigation, have been so characterized by our Supreme Judicial Court. Essex Co. v. Lawrence, 214 Mass. 79 , 89 (1913) (“Essex Company . . . sold subdivisions of the land, to each of which it annexed a definite easement of flowage of water. . . .”). An easement is a “limited, nonpossessory interest in realty.” M.P.M. Builders, LLC v. Dwyer, 442 Mass. 87 , 92 (2004).

The meaning of an easement is found in the terms of the written instrument, construed in the light of the conditions existing at the time. Patterson v. Paul, 448 Mass. 658 , 665 (2007). “The terms and conditions under which an easement may be created and the manner of its exercise are within the control of the creating parties so long as no forbidding principle of law is violated.” Patterson v. Paul, 448 Mass. at 667 (internal citations omitted). Water rights may be granted either as easements appurtenant, or easements in gross, “the nature of the particular easement depending upon the words whereby it is created, the concurrent conditions and the accompanying circumstances.” Holyoke Water Power Co. v. Whiting & Co., Inc. 276 Mass. 528 , 535 (1931). The proper analysis, therefore, is first to determine whether the indentures themselves prevent the LHA Assignment from being effective. If they do not, the next question is whether the assignment attempted in the LHA Assignment is prohibited by the law of real property in the Commonwealth.

1. The Terms of the Indentures Do Not Prohibit the LHA Assignment

When Essex conveyed to Original Pacific Mills, by indenture dated March 18, 1846, land together with six mill powers, the attached Proposal stated that a mill power is “the right to draw from the nearest canal or water course of the grantors, and through the land to be granted so much water. . . .” The indenture itself makes no reference to the mill powers being “appurtenant,” to any land, but conveys land “together with six mill powers (as described in the annexed proposals, and to be used as therein set forth) with all the privileges and appurtenances to the same belonging, a plan of which granted premises is hereto annexed.” It is only in the June 6, 1864 indenture that the mill powers were referred to as appurtenances, in a conveyance of two mill powers “to be used upon, and as appurtenant to, the land heretofore granted.” The meaning is clear: a mill power is by definition a right to draw water through some land (i.e., the penstocks of an individual mill site), and the indenture in this instance specified through which land these two mill powers were to be drawn. On the basis of this language, and also in light of the riparian owner’s responsibility to balance the canals, and the holding in Holyoke Water Power, both discussed infra, there is little doubt that the original establishment of these water rights did not contemplate the ability freely to transfer mill powers amongst the several mill sites. But this does not end the analysis.

While the original indentures did not allow for the free transferability of mill powers, neither did they intend to lock themselves into a situation that could never be changed. There is no language in the indentures themselves which prohibits the result achieved by the LHA Assignment. Rather, in creating these rights, Essex insured that the terms of the indentures or proposals could be modified in the future by the terms of Article XV, where Essex specifically reserved the right to alter the terms of the proposals in subsequent bargains with subsequent mill owners. In an important respect, Essex did covenant to limit a valuable business term of the water power venture it put in place: Essex limited its ability to change the payment, or rent, it was to receive, by covenanting separately with each mill site owner that no subsequent grantee would pay less rent. This commitment by Essex, made with each grantee as sites and powers were conveyed to it, gave the buyer confidence that the recurring payments associated with the use of the powers would be no more favorable for future buyers. This commitment, however, stands in sharp contrast to the freedom Essex evidently reserved to modify the balance of the mill power terms by later agreement with a particular holder of particular powers. There is in the indentures no other qualification like the one concerning rent, or which can be read to limit the ability to amend terms in the future without the assent of all holders of mill powers. Even more important, in the same Article XV, Essex reserved the right to modify even the perpetual rent agreements, if it were done with the unanimous consent of all prior grantees.

The only fair reading of the documents on this pivotal point is that under their terms, it was open to Essex to negotiate with individual holders, from time to time, of the mill powers, to amend them in any lawful way the two parties see fit at the time.

2. No Other Principle of Law Prohibits the LHA Assignment

Pacific Mills does not dispute that Essex and Rowland could have drafted and recorded an instrument amending the indentures of mill powers. And Pacific Mills does not dispute that, through some type of amendment, Essex and Rowland could have reached the same result as they reached in 1978, namely, that LHA would secure, for a stated time period, the benefit of the mill powers in exchange for undertaking to pay the annual rent owed to Essex, and the Pacific Mills site would retain what the right to resume use of the water power easement when the term of the instrument ran out. Pacific Mills’s position that “where an interest is created as appurtenance, unless the instrument creating same allows for it to be converted from an appurtenant interest to an interest in-gross, it may not be severed from the land to which it is appurtenant,” obviously must yield to the ability of all parties to an easement to change the terms of the easement. It is true, of course, that no express amendment of the original indentures exists, but there can be no doubt that the LHA Assignment of 1978, executed by Essex as well as by LHA and Rowland, accomplishes as to those parties the same purpose as any amendment of the original indentures.

Two recent cases dealing with easement rights provide guidance. In Patterson v. Paul, the Supreme Judicial Court affirmed the trial court’s ruling that a so-called “view easement” conferred enough affirmative rights to remove it from the category of servitudes that are subject to the thirty-year limitation set forth in G. L. c. 184, § 23. The court’s rationale was that parties are free to enter into agreements involving their land without being constrained by needless formalism. In other words, the court interpreted the easement in the light of the intent of the parties; the court did not base its interpretation on trying to fit the actual instrument into the predetermined category of “view easement,” which normally is accomplished by a negative easement or restriction. Cf. RESTATEMENT (THIRD) OF PROP.: SERVITUDES ch. 2, introductory note (2000) (“The primary function of the law is to ascertain and give effect to the intent of the parties, not force them into arbitrary transaction forms.”).

In M.P.M. Builders, the Supreme Judicial Court dispensed with Massachusett’s common law rule that an easement, the location of which is fixed, only can be relocated with the consent of both estates, adopting instead a more modern view, embodied in the Restatement, which allows the servient estate to relocate the easement unilaterally, subject to certain procedures and limitations. See M.P.M. Builders, supra, at 92; see also RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 4.8 (3). One of the reasons behind the adoption of this Restatement principle was to minimize the cost generated by an easement, by reducing the opportunity that the grant of an easement will block later beneficial development. M.P.M. Builders, supra, at 92. This rationale clearly is implicated on the facts in our case. A rule, such as that suggested by Pacific Mills, that even a bilateral agreement to change the terms of an easement would be forbidden by the law, in spite of the clear intentions of the parties, is inconsistent with the developing trend of the law of easements in the Commonwealth. Such a strict and unbending rule, which would maximize the costs associated with easements, by increasing the risk the easement will prevent future beneficial development, and which would exalt form over the fair intentions of all interested parties, is not part of the law in Massachusetts.

a. The Decision in Holyoke Water Power

The Supreme Judicial Court has had the opportunity to analyze the language in these indentures, as well as identical language in the indentures on a different river. In Essex Co. v. Goldman, 357 Mass. 427 (1970), the court acknowledged that although the language in the Essex indentures and the indentures for mill powers on the Connecticut River (analyzed in Holyoke Water Power Co. v. Whiting & Co., Inc., 276 Mass. 528 (1931)) were almost identical, the two indentures are properly interpreted differently based on fundamental differences in the design and operation of the two hydraulic enterprises. Essex v. Goldman, 357 Mass. at 433.

The canal system on the Connecticut River at issue in the Holyoke Water Power case consisted of three levels of canals, the first emptying into the second, the second into the third, and then from the third back into the river. Holyoke at 530-31. The riparian proprietor thus had to take into account the so-called “balancing of the canals” to make sure that the mill powers were distributed evenly among the three levels, so that all mills on the higher canals received the water to which they were entitled, and that the water drop at the lower canals was harnessed and not wasted. For Essex Company, given the construction of the dam and canal system on the Merrimack, “balancing” the canals is more simple. As long as the total number of mill powers granted does not exceed the flow of the river, water can go into the North Canal or the South Canal depending on where it is needed. In a tiered canal system, if a mill on the lowest tier attempts to transfer its mill powers to a mill on a higher tier for that mill’s internal manufacturing use, there may not be enough water flow to deliver all the mill powers to those entitled. In Holyoke, it was clearly a violation of the indenture to consume water on site and not allow it to pass to the lower canals [Note 6]; in Essex v. Goldman, the absence of a tiered canal system caused the court to conclude that onsite consumption was not categorically prohibited. See Essex v. Goldman, supra, at 433 (distinguishing Holyoke Water Power Co. because of tiered canal system). In like fashion, the court’s conclusion in Holyoke Water Power that the mill powers could not be severed from the land to which they are attached is not binding on this case today because, while the language may be the same, the circumstances are different. See Essex Co. v. Goldman, 357 Mass. at 433. [Note 7]

Holyoke Water Power may be distinguished for a more basic reason. Unlike the situation now before this court, the mill owner in Holyoke Water attempted a transfer agreement to which the riparian proprietor was not a party. In Holyoke Water, the defendant owned a mill site with fifteen mill powers on the upper canal, and also a second mill site and six and one-half mill powers on a lower canal. Holyoke Water, supra, at 532-35. Without the agreement of the dam company, the defendant began using its mill powers interchangeably between its two sites. Holyoke Water, supra, at 533. The court in Holyoke Water understandably concluded that the mill powers at issue “cannot be used interchangeably but can be used only on the parcels of land with which they were originally united.” Id. at 535. As a result of the differences between the tiered system on the Connecticut River, and the single canal structure on the Merrimack River, Holyoke Water Power is not the controlling authority on this point which plaintiff would have it be.

There is nothing in the Holyoke Water decision that would compel the Supreme Judicial Court to reach the same result if the riparian proprietor had been a party to the agreement. The history of the mill powers claimed by Pacific Mills in the case at bar is itself evidence of multilateral reallocation. In 1939, Original Pacific Mills had two mill sites: the Atlantic Cotton Mills site and the Pacific Mills Lower Site. At the time, each site had mill powers attached. Original Pacific Mills and Essex entered into an arrangement by which the mill powers at the Atlantic Cotton Mills site were transferred to the Lower Site. To do this, Original Pacific Mills first transferred (or abandoned) the Atlantic Cotton Mills mill powers to Essex. Essex then conveyed the mill powers back to Original Pacific Mills, in a conveyance that purported to have “the same effect in all respects” as though the mill powers had been originally granted from Essex as attached to the Lower Site.

The structure of the 1939 Transaction is evidence that the parties to the transaction believed mill powers could not be freely and unilaterally transferred between mill sites. This is not surprising, in light of the Holyoke Water decision rendered just eight years earlier. To the extent that Essex today argues the 1939 Transaction is evidence of a system of free transfer between mill sites, Essex misconstrues the evidence. Original Pacific Mills and Essex Company structured the 1939 Transaction to accomplish a specific result, and the plaintiff today does not dispute that the 1939 Transaction was a success. When Pacific Mills argues that a transfer of mill powers, to have effect, must take an identical form (i.e., transferring the mill powers back to Essex, with Essex transferring them out again), it misses the operative moment of this transaction. The rule is not that only Essex may grant a mill power, or that no mill power shall be conveyed separate from a mill site; the rule is that both Essex and the mill company must become parties to, and fully consent to, the transfer. And in this case, the LHA Assignment is clear that Essex did just that.

b. The Condominium Cases

Pacific Mills relies on two cases from the area of condominium law to support its position that there can be no severance of an appurtenant easement from the land to which it is annexed. This reliance is misplaced.

In Schwartzman v. Schoening, the owner of a condominium unit brought suit against his predecessor to invalidate the grant of a ninety-nine year lease of a parking space that allegedly was appurtenant to the unit. 41 Mass. App. Ct. 220 (1996). The parking space was, under the master deed, an exclusive use common area of the condominium. Id. at 221. The Appeals Court upheld a declaration that such a transfer was invalid.

The right of exclusive use of the parking space became “appurtenant to Unit 9” by operation of “the express reservation of the use of parking spaces to the designated units and not to the titleholders of such units[.]” Schwartzman, 41 Mass. App. Ct. at 222. That it was such an appurtenance was supported by the condominium association’s by-laws, which read, “No part of the [a]ppurtenant [i]nterests of any [u]nit may be sold, transferred, or otherwise disposed of, except as part of a sale, transfer or other disposition of the [u]nit to which such interests are appurtenant. . . .” Id. at 222. The court held that the “inseparability” of the appurtenance from the estate to which it was attached “is not inconsistent with the law of real property on which defendants rely.” Id. at 222.

There is nothing in the holding or reasoning of Schwartzman which dictates that an interest, created as an appurtenance, cannot be severed and transferred to a third party if that is what the parties intend. In Schwartzman, such a transfer was clearly contrary to the intent of the parties, and the court merely affirmed that the original parties to the deed acted within the bounds of real property law. In other words, the Schwartzman court, finding “no forbidding principle of law” had been violated, allowed the result intended by the original parties to the easement.

In Schwartzman, the subject parking space was an easement; the dominant estate was the individual unit to which the parking space was reserved, Unit 9. The servient estate was the collective ownership interest of all the unit owners in the parking space, which the master deed designated as part of the common areas of the condominium. The owner of Unit 9 (the dominant tenement), and a third party were parties to the transfer agreement. In the case now before the court, as to the disputed mill power easements, the dominant estate is the mill site, which is similar to Unit 9 in Schwartzman, because it enjoys the nonpossessory right to use the property of another–the prescribed quantity of moving water. The similarity ends here. In our case, the servient estate is that of the Essex Company, and both the dominant estate and the servient estate are parties to the transfer agreement. The argument of Pacific Mills that the “[t]he participation or ‘consent’ of all the interested parties in McElligott [discussed below] and Schwartzman did not validate the improper severance,” is based on a misunderstanding of the facts of the cited cases. The interest of the servient estate was not represented in either of the transfers in the condominium cases. Schwartzman cannot stand for the proposition that the transfer would be invalid even if the owner of Unit 9 (dominant estate) and all the other unit holders (servient estate) joined in the transfer agreement (or collectively acted in some other fashion, as by amendment of the organic condominium documents), because those facts, not present in that case, make a real difference.

There is another important distinction beyond the fact that in Schwartzman not all parties interested in the transfer of the parking space joined in the that transaction, while the interested parties all did participate in the LHA Agreement. The intent of the parties regarding the disputed mill powers in the instant case is the opposite of that of the parties in Schwartzman regarding the parking space at issue there. In the case now before this court, it clearly was the intention of all parties that the appurtenant mill powers be transferred by the LHA Agreement. To the extent the original indentures provided otherwise, the joinder by Essex in the LHA Agreement overrode the earlier strictures. In Schwartzman, the intention of the non-participating unit owners was not to permit the transfer challenged there. A ruling in this case giving effect to the intent of the interested parties, where no principle of law forbids the result, is not only consistent with Schwartzman–such a result is the one achieved in Schwartzman.

The second condominium case on which Pacific Mills places too much weight is McElligott v. Lukes, 42 Mass. App. Ct. 61 (1997). In McElligott, the Appeals Court upheld a judgment undoing an attempt by a condominium unit owner to lease back to the declarant, for ninety-nine years at a nominal “rent,” a garage structure which, when the condominium had been established a little while earlier, was made appurtenant to the unit owner’s unit. McElligott is, as it says it is, a straightforward application of Schwartzman. The Appeals Court decided McElligott almost exclusively on the particular provisions of the subject condominium by-laws, interpreted, of course, in light of the language of the condominium statute, G. L. c. 183A. See 42 Mass. App. Ct. at 64-5 (holding “the provisions in the relevant condominium documents prohibit such a severance”). As in Schwartzman, the use of, and value associated with, the disputed garage in McElligott effectively went back to the declarant, who turned a profit by leasing it to third parties, all without any consent or approval by the owners of the garage–the unit owners of the condominium. Pacific Mills cannot rely on McElligott for the proposition that a consensual reallocation of the mill powers, with all interested parties participating, is unlawful. That argument suffers from the same deficiencies as the one based on Schwartzman.

Pacific Mills’ position is, in effect, that the benefit of the mill powers, which became appurtenant to the Pacific Mills site, could not under any circumstances lawfully be transferred to benefit another parcel, even one which lies within the lands subject to, and at all times benefited by, the original nineteenth century indentures. Whether attacked as an impermissible “severance” of the mill powers, or a forbidden “transfer” of them to LHA for a stated term for the express benefit of the hydroelectric plant parcel, Pacific Mills says what was done in the LHA Assignment simply could not be done. This strict approach to the law of easements is not, in the circumstances shown by the uncontested facts in the record in this case, supported by Massachusetts law. It is also contrary to the prevailing view of easement law generally.

It is true that the general rule in the law of servitudes is that “...an appurtenant benefit may not be severed and transferred separately from all or part of the benefitted property.” RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 5.6. This general principle is subject, however, to important exceptions, including at least one which is controlling here. “Unless contrary to the terms of the servitude, a benefit consisting of the payment of money, or other benefit that can be severed and transferred without increasing the burden of performance on the obligor may be severed and transferred.” RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 5.6(2)(emphasis supplied). This statement of the legal principle makes the point that where the transfer of the benefit of the servitude takes place–even without the consent of the obligor–that transfer is proper, if the transfer does not increase the burden on the obligor. Here, on the facts in the record, there is nothing to show that the transfer of the benefit of the mill powers from the Pacific Mills site to the LHA site brought about any greater burden to the obligor–Essex–than it shouldered with the mill powers appurtenant to the Pacific Mills site. Even had Essex not joined in the LHA Assignment in 1978, it would be hard to see, particularly given the way the water flows and the dam and canals are set up along the Merrimack, how it would burden Essex any more to have water drawn off to serve the LHA site, rather than the plaintiff’s.

This exception to the general rule, as laid out in the Restatement, shows that, when there is a challenge to the severance and transfer of the benefit of an easement, the focus of the inquiry is on the harm which that transfer might visit on the party burdened by the easement. Here, the question is not even an open one, because we have that burdened party, Essex, joining in the 1978 transfer document, signing on to the reassignment of the mill powers, and, based on the explicit terms of the document, well aware of the hydroelectric project the transfer was meant to facilitate. And Essex continues, through this very litigation, to be an advocate for the validity of the transfer of the benefit of the mill powers to LHA. It is not for Pacific Mills to plead some unspecified increased burden which plaintiff says the 1978 transfer worked on Essex. B. Judicial Estoppel

Courts in the Commonwealth do not allow a litigant who has “successfully maintained a certain position at a trial” to take, in later litigation, a position that is “directly contrary to that taken at the first trial....” East Cambridge Savings Bank v. Wheeler, 422 Mass. 621 , 623 (1996), quoting Gordon v. Lewitsky, 333 Mass. 379 , 381 (1955) and Boston v. Nielsen, 305 Mass. 429 , 433 (1940). In deciding whether a party should be “judicially estopped,” courts will “look to see whether that party is seeking to use the judicial process in an inconsistent way that courts should not tolerate.” Id. This court declines to apply the “judicial estoppel” doctrine to Essex Company, because it is not now taking a position that is “directly contrary to,” or even inconsistent with, its positions in previous proceedings.

In Essex Co. v. Goldman, the Essex Company argued that the covenant to pay rent runs with the land. See Essex v. Goldman, supra, at 431. In this litigation, commenced in this court, Essex Company sued holders of lands and mill powers along the South Canal, and sought judgment declaring the continuing validity of, and enforcing payment under, the covenant to pay annual rent established in the original indentures. The defendants denied they remained subject to the obligation to pay rent, contending that they had not personally agreed to the covenant, and that the covenant to pay was one which did not “touch and concern” their land, and was not appurtenant to it in a way that would cause the covenant to run with the land’s title. Essex Company argued the opposite, and prevailed in the Land Court. The Supreme Judicial Court, affirming the decree on this point in favor of Essex, reasoned that the financial burdens of maintaining the dam and canals in perpetuity would not be assumed by a riparian corporation if the mill powers, and reciprocal covenants to pay rent, were in gross, and not attached to specified land. Id. at 431-32. From this, Pacific Mills takes the position in the case now before this court that it may not hold the disputed water rights to be anything but appurtenant in perpetuity to the Pacific Mills site.

Pacific Mills is not correctly invoking the doctrine of judicial estoppel when it takes this tack. Essex has not said in the pending case that the mill powers as originally constituted, and as considered by the courts in Goldman, were anything but appurtenant rights, belonging to the lands to which they had been attached by the title transactions involved, and bringing with them the corresponding obligation to make annual rent payments. The essential distinction between the position of Essex in the Goldman litigation and in this one, is the intervening LHA Assignment. In that 1978 transaction, the mill power rights associated with the land Pacific Mills now owns were transferred to LHA, with the assent of Essex. In fact, an important part of the consideration LHA gave for the transfer to it of the mill powers, was LHA’s undertaking that it would (for the term of the transfer) take on the legal responsibility for the annual rent related to the mill powers newly-acquired from Rowland. Such an undertaking is something contemplated in the original indentures, described in Goldman, as required of subsequent owners of mill sites along the river when title to those lands changed hands.

The position Essex takes in the current litigation is that the LHA Assignment was valid and effective, precisely because by it the mill powers came into the hands of LHA, to be used by it in conjunction with its hydroelectric facility on nearby land along the river, and in exchange for LHA, as the new land owner, obliging itself to take on the required payments to Essex. Essex does not today claim that a dominant estate with a mill power easement appurtenant can unilaterally transfer its benefit, even to another mill site which is part of the same canal system, without Essex’ assent, and without assuming the payments of annual rent that fall to the holder of the mill powers. If Essex Company were today to say that, it would be advancing an argument inconsistent with that Essex put forward in the Goldman litigation. But for very good reasons, Essex is not saying anything like that in the current case. As the Supreme Judicial Court observed in Goldman, it is doubtful that Essex would wish to be subject to its duties to maintain the watercourse facilities that make the generation of power possible, without being assured that the owners and operators of sites alongside, who profit from the use of those facilities, would be contributing to the cost of maintenance. [Note 8]

Essex also does not take now a position inconsistent with its position in Essex Co. v. Lawrence, 214 Mass. 79 (1913). That litigation concerned the real estate tax assessments by the city, and its request to tax--over and above the assessments against the individual mill sites--the value inherent in the dam, canals, and related facilities retained by Essex, which under the relevant indentures commanded the annual rent payments to Essex. The Supreme Judicial Court granted a tax abatement to Essex. The court said, id. at 91, that the “value of the land of the Essex Company with dam and canals upon it having a capacity...” of generating mill powers “...would be much greater in reason if the right to the use of these mill powers had been not annexed in perpetuity to other parcels of real estate...,” that is, the individual mill sites where the use of the mill powers had by the indentures been committed. From this, Pacific Mills now contends that Essex argued, in the early twentieth century litigation, that the mill powers had been “annexed in perpetuity” to the various mill sites along the river, and so should be judicially estopped, in this twenty-first century litigation, from arguing that those same mill powers might have been lawfully separated from a particular locus, and linked to another along the canal system.

The argument by Pacific Mills in the current case misapprehends the argument by Essex in the earlier litigation. There, Essex maintained (correctly, as it developed) that it was not fair to charge it taxes based on the value associated with the water power rights, which Essex had transferred irrevocably to third party landowners. The value sought to be taxed resided with the holders of the mill powers, not Essex, and there was nothing Essex lawfully could do to use or profit from those powers, because they had been “annexed in perpetuity” to individually-owned mill sites. Once again, Pacific Mills ignores the fundamental distinction between current facts and those in place when the earlier litigation was underway. At the time of the tax abatement case, the water power rights were not in any manner available to Essex. The mill site owners who held them used them and profited from them, and Essex could not undo that without their consent. As a result of the transactions memorialized in the 1978 LHA Assignment (and those like it), mill powers were transferred to a new riverfront land owner, something which would not have happened without the willing consent of Rowland (and the other mill site owners involved. Nothing that happened in those transactions is inconsistent with the position Essex took in Essex Co. v. Lawrence. Essex merely said there that it had parted long ago with the valuable mill powers, had no authority to get them back, and so should not be the one paying taxes with respect to them. Nothing in the record suggests that the LHA Assignment was anything less than fully voluntary on the part of Rowland. And without Rowland’s agreement, the mill powers subject to that transfer would still be associated with the site now owned by Pacific Mills. Essex Company’s position in the tax abatement case is entirely consistent with its current position: that the LHA Assignment is effective because all parties with an interest in the water power rights participated, and that their transfer would have been ineffective otherwise, even if Essex Company had wanted the transfer to happen but Rowland did not. [Note 9]

C. Statute of Limitations

Having decided that the LHA Assignment was a valid assignment of easement rights, and that Essex Company is not judicially estopped from making its defense in this case, the court does not reach the question whether the statute of limitations on suits for recovery of land, G. L. c. 260, § 21, bars Pacific Mills’ claim, or the other collateral defenses of Essex, namely that the equitable doctrines of waiver, estoppel, or laches bar the claims of Pacific Mills. Essex does not seek summary judgment on these counts.

D. Waste

By counterclaim, Essex alleges that Pacific Mills is violating Article VII of the indentures by committing “waste.” [Note 10] Pacific Mills seeks on summary judgment a declaration Pacific Mills it is not, as a matter of law, violating Article VII of the Proposals. Article VII of the Proposals provides:

The grantees are not to use more water than is granted, nor waste it, nor permit it to be wasted for want of repairs or through the deficiency of their works or otherwise; and if so wasted, or more be used than granted, the grantors may stop the water from entering their flumes by closing the gates across them, or by any other method, until such waste or excessive use be sufficiently guarded against; and may also at the same time have their action at law for damages; and other grantees who shall suffer thereby may also have their action at law for damages.

Pacific Mills argues that it cannot be committing waste because it is not using any water pursuant to any mill powers. Although attractive in its simplicity, this argument misreads Article VII, which prohibits, as waste (see note 10) the unpermitted use of water. This prohibition is not limited to water that is part of the flow of a mill power and used to power machinery on a given mill site. The prohibition is on using more water “than is granted.” This means, in the case of Pacific Mills--which the court has ruled has had no valid and enforcement mill powers available to it or its site since the 1978 transfer--that Pacific Mills during its ownership has had no amount of water “granted to it....”

The water used to power the LHA Facility flows from the impoundment into the South Canal, where the intake for the hydroelectric facility is located. Any water entering the North Canal is not used by LHA to generate power. In fact, it would be impossible for the LHA plant – or any facility on the South Canal – to use water from the North Canal. There is water in the North Canal because Essex maintains a certain water level there to preserve those structures in the system which are prone to drying out, and even rotting without being kept wet. Pacific Mills argues that the marginal amount of water being diverted off of the North Canal is of no further utility to the defendants and so cannot be “wasted.” Essex counters that if the works on the Pacific Mills site were not leaking, drawing off water to which that site has no right, then less water would need to be diverted into the North Canal to maintain the optimum water level, leaving more water available for the South Canal, where it is used by the LHA Facility. The proposals attached to Pacific Mills’ indenture define waste broadly, and that definition is not dependent on some party suffering an acute water shortage. The plain language of the Proposal is a covenant by Pacific Mills not to commit any waste. The argument of Pacific Mills, however, is relevant to a different point--remedy.

Article VII sets out three remedies for the unauthorized use of water which under the documents goes by the label “waste.” The grantor may seal the gates to prevent waste, the grantor may bring an action for damages, and any injured party may bring an action for damages. Here, the LHA Facility has, by virtues of the various transfers for its benefit over the years, the right to 133 and one-half mill powers. LHA has not alleged that they are unable to draw the full number of mill powers to which they are entitled as a result of the leaks at the Pacific Mills site on the North Canal. It would seem, then, that LHA is not entitled to damages as a result of the alleged waste, because, on this record, LHA has suffered no harm which is compensable in damages. [Note 11] Likewise, on the record as it now is, Essex Company would be unable to sustain an action for damages against Pacific Mills based on the alleged waste, because Essex has not encountered an inability to provide adequate flow to its grantees or their successors, chief among them LHA, which would render Essex itself liable in damages. If the defendants are able to show that Pacific Mills is committing waste, using excessive water amounts in violation of the indentures, the most relief available to defendants would be an order declaring they can exercise their right to seal the gates pursuant to Article VII. [Note 12]

In addition to the foregoing, Pacific Mills argues that Essex has offered insufficient evidence to support, as an uncontested matter on summary judgment, a finding of the passage of water from the canal into the Pacific Mills site. While it is true that Essex would have the burden of proving this “waste,” or excessive water use, if the question goes to trial, Pacific Mills, as the party moving for summary judgment, has the burden of showing that Essex will be unlikely able to produce sufficient evidence at trial to show this sort of waste. See Kourouvacilis v. General Motors Corp., 410 Mass. 706 , 714 (1991). Essex offers testimony that water is leaking from the Pacific Mills site at the tailrace, below the turbines. Pacific Mills suggests that “this allegation does not allow the logical conclusion, or support the Defendants’ contention, that all water in the tailrace necessarily passed through the closed headgates onto or into the Pacific Mills property from the North Canal.” It is true that the mere fact of water exiting the tailrace does not prove that water is leaking through the headgates; however, it certainly supports the inference that some portion of the leaking water came from the canal, in through the headgates; the water must come from somewhere. The alternative sources of water exiting the Pacific Mills site–sources which would originate from the land, rather than the river and the canal system–are not well developed in the record. Giving every reasonable inference in favor of the nonmoving party, as the court is obligated to do, it is impossible to say on this record that there is not a triable issue of fact as to whether, and to what extent, water is passing through the Pacific Mills headgates, onto the Pacific Mills site, constituting unpermitted use of water under the governing documents. See Attorney General v. Bailey, supra, at 371. This issue--whether water does pass from the canal onto the plaintiff’s land–requires trial. Accordingly, it is

ORDERED that, as to the issue whether the thirty-three subject mill powers were properly assigned to the defendant LHA, the plaintiff’s motion for summary judgment is DENIED, and the defendants’ cross motion for summary judgment is GRANTED. The judgment to enter in this case will declare that the LHA Assignment is a valid transfer or assignment, for its stated term, of the subject mill powers. It is further

ORDERED that, as to the issue whether any defendant is judicially estopped from arguing the subject mill powers are or were validly assignable, there is no such judicial estoppel, and the plaintiff’s motion for summary judgment on this point is DENIED. It is further

ORDERED that, as to the issue whether Pacific Mills is committing waste by use of water to which it is not entitled, the plaintiff’s motion for summary judgment is DENIED. There is a triable issue of material fact as to whether Pacific Mills is making this excessive use. The remedy for waste, if proved at trial, is limited to injunctive relief, the court having ruled that money damages are on this record not available for any prior unprivileged water use by plaintiff. It is further

ORDERED that the plaintiff’s motions to strike collectively are DENIED, and the evidence which was the subject of those motions remains part of the record. It is further

ORDERED that the parties by their counsel promptly are to confer, and, within thirty days of the date of this Order, are to file with the court a joint written report detailing their collective or respective views on their readiness for (and the timing of) trial.

So Ordered.

By the Court. (Piper, J.).