Though Lehi Irrigation said a month ago it would return 58 water shares sold at a January auction, a few more than a dozen have been returned, and many are in the hands of Lehi city, which can't -- under state law -- give them back.

Just 15 of the 58 shares have been returned to the company, making shareholders upset.

"I'm a little impatient I guess, I think it's time they did something," Illa Pulley of American Fork said. She's still waiting to get record of her father's share.

Lehi Irrigation's attorneys declared June 16 that an auction held Jan. 9 was illegal. The firm, Mabey & Wright of Salt Lake City, said 58 shares would be restored to their previous owners once delinquencies were paid. The people who bought the shares at the auction -- many board members and family of the board -- were given refunds.

However, returning shares, which are valued at $10,000 each and treated like cash, isn't an easy process and the delay has led to a lawsuit. Evan Johnson, a water trader, hand-delivered the delinquency of $144 for his share after the reversal was announced June 19.

"We turned our certificate in to the secretary, and we paid the back assessments, but we have not been given a certificate," he said. Johnson and business partner Jim Garside filed a lawsuit against Lehi Irrigation on June 1, but waited to serve it, hoping to simply have the water right restored.

The process becomes complicated because it's been seven months since the auction, and the shares have changed hands.

"A lot of the shares that were sold at the auction have been sold to the city," attorney David Wright said. The shares could have been sold to developers, who then have to give the city enough water for their development. In Lehi and the surrounding areas, a lot of that is done through Lehi Irrigation's water shares.

According to Utah's constitution, cities and towns cannot give up water rights, no matter if they were obtained illegally, Lehi city attorney Kenneth Rushton said.

"I'm assuming that they simply do not want cities just giving up water because it's a precious commodity, and in order for them to provide water services to the public, they need water," Rushton said of why the provision was in place.

In Article XI, Section 6, the Utah Constitution states "No municipal corporation, shall directly or indirectly, lease, sell, alien or dispose of any waterworks, water rights, or sources of water supply now, or hereafter to be owned or controlled by it ..."

The problem means that some former shareholders may never get the same shares back.

Salt Lake Attorney Daniel Jensen, who specializes in water law, said the state constitution is clear that water rights cannot be given back.

"Because of that, I don't think a judge could order the return of property. Judges can't insist on constitutional act," Jensen said. "But it's not entirely clear if shares of stock are considered in that provision anyway."

That means a judge will have to decide if shares of stock, or water shares, are actual water rights owned by Lehi.

"The share is owned by the city, but the share is not, it's owned by Lehi Irrigation," Jensen said. There is no precedence on the case.

Because of the constitutional provision, the company plans to replace the shares by buying other shares that are for sale and giving them to the shareholders. The company will be using insurance money and company funds for the purchases.

"We think we can round up enough shares to fill whatever hole needs to be filled in getting these shares back to the original shareholders," Wright said, noting that the process could take months for everything to be restored. He said the company will probably buy 38 shares, though the number could decrease if more shares are returned.

However, some of the shareholders who bought the shares at the auction thought they were doing it legally, and don't want a refund. The shares were sold well below their value, reportedly because they were only seeking to pay for the delinquencies.

"They've been told to return them," Wright said of the exchanges at the auction. "Some of these people have hired attorneys and they want to put up a fight, but we've told them that they need to be returned."

After six weeks of waiting, the water traders are taking Lehi Irrigation to court.

"They wouldn't pay me my costs," Johnson said. "They wasted my time, they wasted my money and they still haven't given me a certificate."

The January auction was ruled illegal because it violated state law. Mabey & Wright's statement declaring the auction void said, "Unfortunately, the company, acting on the advice of former counsel, made some mistakes in conducting the sale."

However, that former counsel, attorney Brent Young, said he was unaware of the auction.

"I was not consulted by anyone regarding the act of the statutory requirements for the sale of Lehi Irrigation stock to collect delinquent assessments from Lehi Irrigation," he said in a statement. "I learned about the sale which occurred on or about 9 of January 2006 in early May 2006."

At that point, Young started an investigation, but Lehi Irrigation eventually sought the counsel of Mabey & Wright.

Part of the problem with the auction was that the shareholders were only contacted through an ad in a newspaper, instead of directly, like they're supposed to be. The auction was supposed to be made public, which it wasn't.

The company also made too much money in the auction. They needed $12,000 to cover the delinquency. Attorney John Mabey declined to say how much more than $12,000 was made.

When Garside and Johnson purchased their share in April, the seller didn't know that his share had been auctioned. Since then, Johnson said that he has spent $2,000 in legal fees trying to get his share.

Johnson and Garside aren't alone in their frustrations.

Pulley is looking for a certificate for her father's share. Her father, Era B. Gibbons, was listed in the initial posting of delinquent shareholders. Seeing the notice, she went to Lehi Irrigation Jan. 8 and paid a delinquency of $837.54.

The check cleared, but her share was still auctioned and Pulley is still waiting. She said she's been told the issue is not having a certificate number.

"They knew how much taxes I owed on it, but they can't find the certificate number," Pulley said.

Wright said that the company has to follow state statutes before it can issue another certificate because there can't be two certificates printed for the same water share.

"That protects everybody just in case the old certificate shows up someday," Wright said.

Still, Pulley remains frustrated.

"It is frustrating because my dad's name was in the paper, showing that there was taxes due. How do they have all this information and not the certificate numberfi"

Wright said part of the delay with Garside and Johnson's share is the pending litigation. He hopes that the final conclusion to the suit would be restoring the share.

"There's something wrong with Lehi Irrigation besides the auction," Johnson said. "People can't get their water shares, they can't see the records, you can't do anything. It doesn't work properly."

Natalie Evans is available at 344-2561 or nevans@heraldextra.com.

This story appeared in The Daily Herald on page A1.