IN THE SUPREME COURT O F THE STATE OF MONTANA
r
IN THE MATTER OF THE ADJUDICATION OF THE
EXISTING RIGHTS TO THE USE OF ALL THE WAT
BOTH SURFACE AND UNDERGROUND WITHIN THE C
FORK RIVER DRAINAGE AREA ABOVE THE BLACKFOOT JUL2 1992
RIVER, INCLUDING ALL TRIBUTARIES OF THE CLARK
FORK RIVER ABOVE THE BLACKFOOT RIVER IN DEFF
LODGE, GRANITE, LEWIS & CLARK, MISSOULA, P O E M
AND SILVER BOW COUNTIES, MONTANA.
z sg$titk
d
SUPREME COURT
STATE OF FAONTANA
APPEAL FROM: The Water Courts of the State of Montana,
The Honorable Leif B. rickso on, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
M. K. Daniels, Attorney at Law, Deer Lodge, Montana
F o r Respondent :
DavidL. Pengelly, Knight, Maclay & Masar, Missoula,
Montana
Submitted on B r i e f s : May 2 1 , 1 9 9 2
Decided: J u l y 2, 1 9 9 2
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
This appeal arises from an order of the Water Court. The
Water Court found that co-appellant City of Deer Lodge, predecessor
in interest to co-appellants Evered and Ramona McQueary, abandoned
through nonuse two water right claims in Cottonwood Creek, a
tributary of the Clark Fork River. The Water Court ordered that
the two water right claims shall not appear in the Preliminary or
Final Decrees of the Clark Fork River Basin above the Blackfoot
River (Basin 76G). We affirm.
The issue on appeal is whether the Water Court erred in
finding that Deer Lodge abandoned the two water rights in
Cottonwood Creek.
Pursuant to the statewide adjudication of existing water
rights, Deer Lodge filed two claims for municipal use of water out
of Cottonwood Creek. The claims are identified as 76G-W-010397-00
and 76G-W-010398-00 and were obtained by Deer Lodge from a private
water company in 1934. Upon the issuance of a Temporary
Preliminary Decree for the Clark Fork River Basin above the
Blackfoot River (Basin 76G) in 1985, respondents William J.
Applegate and Sharon Applegate filed objections to both claims on
the basis that the claims had been abandoned by Deer Lodge.
In 1989, before the Water Court ruled on the Applegates'
objections, Deer Lodge sold its interest in the two water rights to
Evered and Ramona McQueary and filed a water right transfer
certificate relating to those rights with the Montana Department of
Natural Resources and Conservation. The Department acknowledged
2
the transfers on March 21, 1990, subject to the ongoing
adjudication of the water rights.
A Water Master conducted a hearing on the Applegatest
objections to the claims on October 3, 1990. At the hearing, the
Applegates presented evidence that Deer Lodge had not used either
of the two water rights for any municipal purposes, the beneficial
use for which the rights were claimed, since the late 1940s. The
period of nonuse was shown to be in excess of twenty-three years as
of July 1, 1973. Deer Lodge presented testimony through the Deer
Lodge City Clerk that the two water rights had been carried as
assets on the city books during the time period between the late
1940s and July 1, 1973. The Clerk also testified that the
diversion and conveyance works formerly associated with the water
rights were no longer carried as assets on the city books.
Deer Lodge also offered into evidence three engineering
reports relating, in part, to feasibility studies of the city's use
of the Cottonwood Creek water rights. Each report was prepared
after July 1, 1973. The reports were admitted for the limited
purpose of demonstrating Deer Lodge's lack of intent to abandon the
water rights after July 1, 1973.
Following the hearing, Deer Lodge requested that the record be
reopened to allow it to introduce additional evidence. It sought
to introduce supplemental exhibits identified as C-18, C-19 and C-
20. Each exhibit related to a city-owned right-of-way easement
across the Applegates' property for a water pipeline. The Water
Master denied Deer Lodge's request to supplement the record and,
thereafter, entered his report on November 30, 1990.
The Water Master found that the relevant time frame for
determining whether Deer Lodge abandoned the two water rights was
the period prior to July 1, 1973; thus, the post-1973 engineering
reports were found to be unpersuasive as evidence of a pre-July 1,
1973 lack of intent to abandon the water rights. He further found
that Deer Lodge had abandoned both claims through nonuse over a
period of time in excess of twenty-three years. Deer Lodge
objected to the Water Master's report and requested a hearing
before the Water Court.
The Water Court heard oral argument on Deer Lodge's objections
on April 12, 1991. Following the hearing, the Water Court issued
its findings of fact, conclusions of law and decree. It denied
Deer Lodge's request to supplement the record with exhibits C-18,
C-19 and C-20 and adopted the Water Master's findings regarding
Deer Lodge's abandonment of the two water rights. The Water Court
ordered that water right claims 76G-W-010397-00 and 76G-W-010398-00
shall not appear on the Preliminary and Final Decrees of the Clark
Fork River Basin above the Blackfoot River (Basin 76G). This
appeal followed.
Did the Water Court err in finding that Deer Lodge abandoned
the two water rights in Cottonwood Creek?
The abandonment of a water right is a question of fact.
Section 89-802, RCM (applicable here, repealed in 1973); 79 Ranch,
Inc. v. Pitsch (1983), 204 Mont. 426, 431, 666 P.2d 215, 217. The
standard of review of judge-made findings of fact is whether the
findings are clearly erroneous. Dennis v. Tomahawk Services, Inc.
(1989), 235 Mont. 378, 767 P.2d 346. This Court recently adopted
a three-part test to determine if a finding is clearly erroneous.
First, the Court will review the record to see if the
findings are supported by substantial evidence. Second,
if the findings are supported by substantial evidence we
will determine if the trial court has misapprehended the
effect of evidence. [Citations omitted.] Third, if
substantial evidence exists and the effect of the
evidence has not been misapprehended, the Court may still
find that "[A] finding is 'clearly erroneous' when,
although there is evidence to support it, a review of the
record leaves the court with the definite and firm
conviction that a mistake has been committed." [Citation
omitted. ]
Interstate Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 323,
It is a fundamental principle in Montana that appropriation of
water is based on its beneficial use; when the owner of the water
right abandons or ceases to use the water for its beneficial use,
the right ceases. 79 Ranch, 204 Mont. at 431, 666 P.2d at 217.
This controlling policy of beneficial use was explained long ago in
Power v. Switzer (1898), 21 Mont. 523, 529, 55 P. 32, 35, as quoted
by this Court in 79 Ranch:
It has been a mistaken idea in the minds of many, not
familiar with the controlling principles applicable to
the use of water in arid sections, that he who has
diverted, or "claimed" and filed a claim of, water for
any number of given inches, has thereby acquired a valid
right, good as against all subsequent persons. But, as
the settlement of the country has advanced, the great
value of the use of water has become more and more
apparent. Legislation and judicial exposition have,
accordingly, proceeded with increasing caution to
restrict appropriations to spheres of usefulness and
beneficial purposes. As a result, the law, crystallized
in statutory form, is that an appropriation of a right
to the use of running water flowing in the creeks must be
for some useful or beneficial purpose, and when the
appropriator, or his successor in interest, abandons and
ceases to use the water for such purpose, the right
ceases. [Citation omitted.]
Two elements are necessary for the abandonment of a water
right: nonuse of the water associated with the water right and
intent to abandon the water right. Shammel v. Vogl (1964), 144
Mont. 354, 396 P.2d 103; Thomas v. Ball (1923), 66 Mont. 161, 213
P. 597. We stated in 79 Ranch that evidence of a long period of
continuous nonuse of a water right raises a rebuttable presumption
of an intent to abandon that right and shifts the burden of proof
to the nonuser to explain the reasons for nonuse. 79 Ranch, 204
Mont. at 432-33, 666 P.2d at 218. To rebut the presumption of
abandonment, there must be established some fact or condition
excusing the long period of nonuse, not mere expressions of hope or
desire reflecting a "gleam-in-the-eye philosophyM regarding future
use of the water. 79 Ranch, 204 Mont. at 433-34, 666 P.2d at 218-
19 (citing authorities).
The case at bar presents a factual situation similar to that
in 79 Ranch. The Applegates presented uncontradicted evidence that
Deer Lodge had not used the two water rights since it ceased using
Cottonwood Creek water for municipal purposes in the late 1940s.
This showing of twenty-three plus years of continuous nonuse raised
a rebuttable presumption that Deer Lodge had abandoned the water
rights.
The burden of proof then shifted to Deer Lodge to rebut the
presumption of abandonment. The only relevant evidence offered by
Deer Lodge was that it continued to carry the water rights as
assets on its books during the period of nonuse. It presented no
evidence that it had made any efforts to make use of the water
rights between the late 1940s and July 1, 1973. It presented no
evidence that it had maintained its diversion and conveyance
facilities; in fact, it indicated that those facilities were no
longer carried as assets on its books.
Deer Lodge's evidence that it carried the water rights as
assets on its books is not sufficient to rebut the presumption of
abandonment. It does not meet the requirement in 79 Ranch of
explaining the reasons or excuse for long periods of nonuse.
Indeed, Deer Lodge's evidence, by itself, reflects nothing more
than a "gleam-in-the-eye philosophyw regarding future use of the
water which, as stated in 79 Ranch, "is not consistent with the
protection and preservation of existing water rights." 79 Ranch,
204 Mont. at 434, 666 P.2d at 219. To find otherwise would be
inconsistent with the "[f]undamental policy that a water right does
not mean possession of a quantity of water, but its beneficial
use." 79 Ranch, 204 Mont. at 433, 666 P.2d at 218 (emphasis in
original).
Deer Lodge suggests that it was caught by surprise and was
"blindsidedr' the Water Court's finding that the pre-July 1, 1973
by
time frame was controlling in determining the abandonment question
and the court's corresponding finding that the post-1973
engineering reports were not persuasive in showing a lack of intent
to abandon. It states that it assumed that its burden was to show
a lack of intent to abandon the water rights by post-July 1, 1973
evidence and, thus, it "[mlade no effort to obtain evidence that
may have been available during the period from the late 1940's to
July 1, 1973."
We find no error on the part of the Water Court in refusing to
consider Deer Lodge's post-1973 engineering reports as persuasive
evidence. The Montana Water Use Act was enacted during the 1973
legislative session and became effective on July 1, 1973. The Act
defined an "existing right" as "[a] right to the use of water which
would be protected under the law prior to July 1, 1973.11 Section
89-867(4), RCM (now 5 85-2-102(9), MCA). In 1979, upon passage of
the general statewide Water Adjudication Act, the legislature
directed the adjudication of all "existing" water rights and
specifically identifiedthose rights as those in existence prior to
July 1, 1973. Section 85-2-212, MCA. Thus, the clear purpose of
statewide adjudication is to adjudicate water rights as they
existed on July 1, 1973. Given this background, the Water Court
correctly determined that only the pre-July 1, 1973 time frame was
relevant on the abandonment question and evidence relating to
intent to abandon which reflected Deer Lodge's post-1973 actions
was not persuasive.
Deer Lodge also asserts that the Water Court should have
considered its post-hearing evidence regarding its continued
protection of an easement for a pipeline across the Applegatest
property as evidence of a lack of intent to abandon the water
rights. We conclude that the Water Court in this case correctly
refused to consider this evidence. Montana law has long recognized
that water rights and easements or ditch rights are separate and
distinct rights. McDonnell v. Huffine (1912), 44 Mont. 411, 422-
23, 120 P. 792, 795; Missoula Light & Water Co. v. Hughes (1938),
106 Mont. 355, 365, 77 P.2d 1041, 1046; Mildenberger v. Galbraith
(1991), 249 Mont. 161, 166, 815 P.2d 130, 134. Because water
rights and easements are separate and distinct legal rights, one
can be abandoned without abandoning the other. McDonnell, 44 Mont.
at 423, 120 P. at 795. While in other cases such evidence may be
admissible, evidence of Deer Lodge's continued protection of its
easement was irrelevant to the issue of whether it abandoned its
water rights.
We conclude that the Water Court's finding that Deer Lodge
abandoned its claims to the two water rights in Cottonwood Creek is
supported by substantial evidence. Further, in accordance with our
three-part test in Interstate Prod. Credit Ass'n, we determine that
the court did not misapprehend the effect of the evidence.
Finally, after a review of the record, we are not left with a
definite and firm conviction that a mistake has been committed.
Accordingly, we hold that the Water Court's finding that Deer Lodge
abandoned the water rights is not clearly erroneous and, thus, we
will not disturb the court's ruling.
Affirmed.
We concur:
July 2, 1992
CERTIFICATE OF SERViCE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
M. K. DANIELS
Attorney at Law
P.O. Box 670
Deer Lodge, MT 59722
David L. Pengelly
KNIGHT, MACLAY & MASAR
P.O. Box 8957
Missoula, MT 59807-8957
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA