E E EGGEBRECHT INC v WATERS

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No. 84-118 I N THE SUPREME COURT O THE STATE O MONTANA F F 1935 E . E. EGGEBRECHT, I N C . , a Montana c o r p . , P l a i n t i f f and R e s p o n d e n t , OTIS S. WATERS, e t a l . , D e f e n d a n t s and A p p e l l a n t s . APPEAL FROM: D i s t r i c t Court of t h e Seventh J u d i c i a l D i s t r i c t , I n and f o r t h e County o f McCone, The H o n o r a b l e LeRoy McKinnon, J u d g e p r e s i d i n g . F COUNSEL O RECORD: For Appellants: B a x t e r L a r s o n a r g u e d , Wolf P o i n t , Montana F o r Respondent : Garden, McCann & S c h u s t e r ; G e r a r d M. Wolf P o i n t , Montana Schuster argued, Submitted: Decided: Filed: lggj March 1 3 , 1385 August 8 , 1985 Mr. Justice John Conway Harrison delivered the Opinion of the Court. This is an appeal from a ludgment of the District Court, Seventh Judicial District, McCone County, quieting title to a parcel of land owned by E. E. Eggebrecht, Inc. ("Eggebrecht"), plaintiff and respondent, and defeating a right of way for a reservoir site on that land held by Otis S. and Ardis Waters and Waters, Inc. ("Waters"), defendants The land in question is situated in NE%, Sk, and appellants. Section 12, T. 24 N., Rge. 49 E., M.P.M., McCone County, Montana. Eggebrecht bought this land in 1973 under a contract for deed. Waters own an adjacent parcel of land. In 1976, Waters rebuilt a dam on Wolf Creek, a small stream that bisects the two properties. two-thirds of a mile Eggebrecht's land. to water in the dam is located about the east of the boundary with The water backed by this dam is known as the Wolf Creek reservoir. the The On several occasions since 1978 reservoir Eggebrechtls farmland. has covered a portion of Since the amount of water in the reservoir depends on both the extent of spring runoff and the amount of irrigation required on Waters' land, the number of Eggebrecht's acres flooded, as well as the length of time the water has stood on those acres, has varied from one year to the next. From 1978, the first year that water was backed onto Eggebrechtls land, to 1983, the year this lawsuit was filed, the maximum amount of Eggebrecht 's farmland affected in any one year was twenty-five acres. Moreover, in no year was this land rendered completely unproductive. Eggebrecht was able to seed the affected acreage after the water receded, gathering, to be sure, considerably lower yields. In addition to causing decreased productivity on some of Eggebrecht's farmland, the water has at various times caused Eggebrecht great inconvenience in moving machinery to a particular field; he has at those times been forced to make either an eight mile detour or pass through a neighbor's cultivated field. The reservoir right of way that is the focus of this lawsuit was acquired by Waters' predecessor in interest pursuant to sections 18-21 of a March 3, 1891, Act of Congress entitled, "An act to repeal timber culture laws and for other purposes." 4 3 U.S.C., $5 946-949 (1982). Under this Act, canal companies and irrigation districts, formed for the purpose of irrigation and drainage, and having filed the necessary materials for the approval of the Secretary of the Interior, were granted a right of way on the public lands for the ground occupied by any ditch, canal, or reservoir they constructed. A map of the land so occupied was to be filed in the local land office and thereafter all lands burdened by such a right of way were to pass subject to the right of way. In this case the validity of the right of way acquired by Waters' predecessor in interest Eggebrecht and is not at issue. is not questioned by A copy of a map of the reservoir filed as an application under the Act, along with a copy of a letter from the Interior Department indicating that the reservoir had been constructed and the "easement" earned, was accepted by the District Court as evidence that the right of way had properly vested. We find no reason to hold otherwise. Upon initial review this case appeared straightforward. Waters and Eggebrecht agreed that the right of way for the reservoir site should properly he designated an easement by grant from interest. the United States to Waters>redecessor in They further agreed that the reservoir site had been used as a reservoir from 1910 (the year the first dam was built) to 1938 (the year the last dam washed out) , but that from 1938 to 1976 there was no dam and thus, obviously, no reservoir. At oral argument it was conceded that the issue presented was whether an easement by grant can be abandoned by non-user. We have discovered, however, in the course of our review of this case that there is a great deal of confusion over the nature of the reservoir right of way that was granted to Waters' predecessor in interest under the March 3, 1891, Act in question. (1921), 257 U.S. In Kern River Co. v. United States 147, 152, 42 S.Ct. 60, 62, 66 L.Ed. 175, 178, the Court stated, "The right of way intended by the Act was neither a mere easement nor a fee simple absolute, but a limited fee on an implied condition of reverter in the event the grantee ceased to use or retain the land for the purpose indicated in the act." Unfortunately, this obscured both the nature of the present interest held by the grantee and the future interest held by the grantor. With respect to the future interest, the use of the term "reverter" is clearly in error. Several cases have held that divestiture under the Act does not occur automatically upon failure to use or retain the land for the purpose stated in the Act, but must be d.etermined by a legal proceeding. Hurst et al. v. Idaho-Iowa Lateral and Reservoir Co. (Idaho 1926), 246 P. 23; Hurst et al. v. Idaho-Iowa Lateral and Reservoir Co. (Idaho 1921), 202 P. 1068; Carns v. Idaho-Iowa Lateral and Reservoir Co. (Idaho 1921), 202 P. 1071; United States v. Whitney (1910), 176 F. 593. The Idaho Court in Hurst (1921) compounded the terminological error in Kern River by characterizing the future interest retained by the United States as a possibility of reverter. element of a possibility However, a basic of reverter is that possession reverts automatically upon the occurrence of an event named in the granting instrument (in this case the Act of Congress) Survey . American - - Property, Vol. I, Law of of - - -of the Law § Property, 3d.ed., p. 105. 4.12; Boyer, Since it has been held, even in the Hurst case, that there is no automatic reversion under the Act in question, it is clear that the United States did not retain a possibility of reverter. Rather, the United States granted to Waters' predecessor in interest a right of way in the reservoir site subject to the condition that it be used for the purpose indicated in the Act. Should it not be used for that purpose, then the United States can choose to exercise a right of re-entry or a power of termination, thereby causing a forfeiture of the right of way. We now turn to the nature of the present interest in the reservoir site held by Waters. When the United States Supreme Court in Kern River, supra, designated the present interest under the Act in question a "limited fee" it was relying on an earlier decision in Rio Grande Western Ry. Co. v. Stringham (1915), 239 U.S. 44, 36 S.Ct. 5, 60 L.Ed. 136. In Stringham the Court characterized a railroad right of way obtained under a 1875 Act of Congress as a "limited fee." 239 U.S. at 47, 36 S.Ct. at 6, 60 L.Ed. at 138. The ration- ale for this characterization was later severely criticized by the Court in Great Northern Ry. Co. v. United States (1942), 315 U.S. 262, 62 S.Ct. 529, 86 L.Ed. 836. In that case the Court found that the railroad rights of way obtained under the 1875 Act should properly have been designated easements. It follows therefore that the designation in Kern River, that the reservoir right of way under the 1891 Act is a limited analysis fee, rests on a shakey legal foundation. of the limited fee/easement distinction An as it pertains to a reservoir right of way under the 1891 Act is contained in United States v. Big Horn Land and Cattle Co. (8th Cir. 1927), 17 F.2d 357. In that case it was emphasized that a fee interest may be had in an easement. it, therefore, not important whether "We think, interest or estate passed be considered an easement or a limited fee. In any Big event it is a limited fee in the nature of an easement." Horn Land and Co., - - - Cattle - 17 F. 2d at 365. River introduced unnecessary We agree. terminological Kern confusion. Therefore, we hold that, despite Kern River, there is no useful distinction to be made between a limited fee and an easement when describing the nature of a reservoir right of way granted under the 1891 Act. Since the reservoir right of way in question can safely he characterized as an easement, we turn to the question of whether the lower court erred when it determined that said right of way had been abandoned. The rule in Montana is that in order to constitute an abandonment an intent to abandon is necessary. Hilyard v. Engel (1949), 123 Mont. 20, 209 P.2d 895; Conway v. Fabian (1939), 108 Mont. 287, 89 P.2d 1022; Rodda v. Best (1923), 68 Mont. 205, 217 P. 669; Moore v. Sherman (1916), 52 Mont. 542, 159 P. 966. Certainly, Waters never communicated by word an intent to abandon the reservoir right of way. Further, and contrary to the claim of Eggebrecht, mere non-use of an easement by grant, no matter how long continued, does not constitute abandonment. City of Billings v. O.B. Lee Co. (1975), 168 Mont. 264, 542 P.2d 9 7 . The mere fact that from 1938 to 1976 no dam was in place with which to back water onto the reservoir site does not constitute abandonment of the reservoir right of way. Whether 38 years of non-use constitutes grounds for forfeiture under the Act is a question that can be raised only by the United States and not by the patentees and their successors. Wiltbank v. Lyman Water Company (Ariz. 1970), 477 P.2d 771. The judgment of the District Court is reversed. We concur: Justices District Judge, sitting in place of Mr. Justice L. C. Gulbrandson J u s t i c e F r e d J . Weber d i s s e n t s a s f o l l o w s : Mr. I r e s p e c t f u l l y d i s s e n t from t h e b a s i c c o n c l u s i o n o f t h e majority opinion that the r e s e r v o i r s i t e c a n he r a i s e d not by the patentees and question of non-use o n l y by t h e U n i t e d their in successors of the S t a t e s and interest. I c o n c l u d e t h a t t h e s u c c e s s o r i n i n t e r e s t t o t h e p a t e n t e e from t h e United S t a t e s h a s t h e c a p a c i t y t o r a i s e t h e q u e s t i o n o f non-use . I n concluding t h a t can seek a forfeiture, it i s o n l y t h e U n i t e d S t a t e s w h i c h the majority opinion W i l t b a n k v. Lyman Water Company ( A r i z . C t . A p p . 771. relies upon 1 9 7 0 ) , 477 P.2d T h e r e a r e s i g n i f i c a n t d i f f e r e n c e s between t h e W i l t b a n k f a c t s and t h o s e i n t h e p r e s e n t c a s e . I n Wiltbank, t h e United S t a t e s government s i m u l t a n e o u s l y g r a n t e d r e s e r v o i r r i g h t s and the right to enough water to fill the reservoir maximum h e i g h t and t o k e e p i t f i l l e d i f p o s s i b l e . to its The i s s u e s i n W i l t b a n k i n c l u d e d b o t h t h e r e s e r v o i r s i t e and t h e r i g h t t o t h e water t o f i l l t h e reservoir. The A r i z o n a c o u r t c o n c l u d e d t h a t i t would b e a b s u r d t o a l l o w a r e s e r v o i r r e v e r s i o n t o t h e f e d e r a l government and n o t i n c l u d e t h e w a t e r r i g h t s t o f i l l it. The c o u r t f u r t h e r concluded t h a t t h e r e s e r v o i r and t h e n e c e s s a r y w a t e r r i g h t s b o t h made up t h e l i m i t e d f e e w h i c h was retained by the United States and not granted to the patentee. Based upon t h a t c o n c l u s i o n , t h e A r i z o n a c o u r t h e l d that forfeiture any or abandonment is strictly an issue b e t w e e n t h e l i m i t e d f e e h o l d e r and t h e U n i t e d S t a t e s a s t h e grantor with reverter rights. persuasive authority in the I do n o t present f i n d Wiltbank t o be c a s e which deals only w i t h a r e s e r v o i r s i t e and no q u e s t i o n h a s been r a i s e d a s t o t h e r i g h t t o t h e use of water i t s e l f . I would a d o p t t h e r a t i o n a l e used by t h e C o u r t i n H u r s t v. Idaho-Iowa Lateral & I d a h o Supreme R e s e r v o i r Co. (Idaho 1921), 202 P. 1.068. In Hurst the appellants claimed an e a s e m e n t i n l a n d f o r a c a n a l and r e s e r v o i r g r a n t e d u n d e r t h e same a c t o f C o n g r e s s o f March 3 , case. 1 8 9 1 , d e s c r i b e d i n o u r own I n H u r s t t h e r e s p o n d e n t a s t h e o w n e r s o f t h e l a n d upon w h i c h t h e r e s e r v o i r was l o c a t e d , s o u g h t a d e c l a r a t i o n b y t h e I d a h o c o u r t t h a t t h e e a s e m e n t i n t h e l a n d s had b e e n f o r f e i t e d and abandoned. I n g r a n t i n g a new t r i a l , t h e I d a h o Supreme Court r e f e r r e d t o t h e contention t h a t o n l y t h e United S t a t e s may a c t : "The c o n t e n t i o n i s made t h a t o n l y t h e U n i t e d S t a t e s c a n t a k e a d v a n t a g e o f f o r f e i t u r e , and t h a t i f appellant failed t o use its reservoir site f o r t h e purposes of the grant, private parties like a r e s p o n d e n t s c a n n o t q u i e t t i t l e i n t h ~b s e n c e o f ..This i s t h e any a c t i o n by t h e United S t a t e s it n e c e s s a r y t o o n l y q u e s t i o n w h i c h w e deem c o n s i d e r on t h i s appeal." H u r s t , 2 0 2 P. a t 1 0 6 9 . . . The Idaho patent the Supreme C o u r t carried land, a l l of including concluded that the disposition t h e i n t e r e s t o f t h e United the right to declare a by States in reversion, stating: " W e t h i n k it was t h e i n t e n t i o n o f C o n g r e s s i n making p r o v i s i o n f o r t h e d i s p o s i t i o n o f p u b l i c l a n d s , o v e r w h i c h r i g h t s o f way f o r r e s e r v o i r s and c a n a l s have been g r a n t e d s u b j e c t t o such r i g h t s o f way, t h a t s u c h d i s p o s i t i o n s h o u l d c a r r y w i t h it a l l t h e i n t e r e s t o f t h e United S t a t e s i n t h e l a n d , including t h e reversion i n case of breach of c o n d i t i o n s s u b s e q u e n t o r i n c a s e o f abandonment. The n a t u r a l c o n s t r u c t i o n o f t h e l a n g u a g e o f t h e s t a t u t e leads t o t h i s conclusion. No s u f f i c i e n t r e a s o n i s s u g g e s t e d which r e q u i r e s a d i f f e r e n t It i s t h e p o l i c y o f t h e United construction. S t a t e s t o make f i n a l d i s p o s i t i o n o f i t s l a n d s a n d s u b j e c t them t o t h e j u r i s d i c t i o n o f t h e s t a t e s i n which they are situated, unless some public i n t e r e s t r e q u i r e s a c o n t i n u a t i o n o f governmental control." H u r s t . 202 P. a t 1 0 7 0 . 7: a p p r o v e federal the foregoing analysis. There i s nothing i n t h e s t a t u t e s o r r e g u l a t i o n s which s u p p o r t s t h e m a j o r i t y c o n c l u s i o n t h a t t h e r i g h t o f r e v e r s i o n was t o remain v e s t e d i n t h e United S t a t e s . There i s no i n t e n t i o n t o r e s e r v e i n t h e p a t e n t from t h e U n i t e d S t a t e s . T h e r e i s no p u b l i c p o l i c y suggested in the present case which makes a reservation appropriate. I would i s s u a n c e of therefore t h e United conclude that States patent, as a result of the t h e p a t e n t e e and h i s s u c c e s s o r s i n i n t e r e s t h a v e s u c c e e d e d t o t h e r i g h t t o claim a Mr. J u s t i c e Frank B. Morrison, J r . d i s s e n t s a s follows: I r e s p e c t f u l l y d i s s e n t t o t h e majority opinion. F i r s t , I b e l i e v e t h e Court has e r r e d i n i t s treatment of the reversion issue. The m a j o r i t y s t a t e s : " I n Kern River Co. v. U n i t e d S t a t e s ( 1 9 2 , 257 U.S. 1 4 7 , 1 5 2 , 42 S . C t . 6 0 , 62, 66 L.Ed. 1 7 5 , 1 7 8 , t h e C o u r t s t a t e d , 'The r i g h t o f way i n t e n d e d by t h e A c t was n e i t h e r a mere e a s e m e n t n o r a f e e s i m p l e a b s o l u t e , b u t a l i m i t e d f e e on a n i m p l i e d c o n d i t i o n o f r e v e r t e r i.n t h e e v e n t t h e g r a n t e e c e a s e d t o u s e o r r e t a i n t h e land f o r t h e purpose i n d i c a t e d i n t h e a c t . "' Thus, i n 1 9 2 1 , t h e U n i t e d S t a t e s Supreme C o u r t h e l d t h a t the grant here in question was subject to a reversionary i n t e r e s t and i n t h e e v e n t t h e g r a n t e e c e a s e d t o u s e t h e l a n d for reservoir purposes, the reversion would occur. The e f f e c t h e r e would b e t h a t p r e d e c e s s o r s i n i n t e r e s t t o W a t e r s , when they ceased to use triggered the reversion, the land for reservoir purposes, automatically reinvesting t h e fee i n Eggebrecht's predecessors. Of c o u r s e , t h i s would r e q u i r e a f f i r m i n g t h e d i s t r i c t c o u r t judgment i n f a v o r o f E g g e b r e c h t . To a v o i d t h i s r e s u l t t h e m a j o r i t y h a s t r e a t e d t h e r e v e r s i o n a s a condition subsequent r e q u i r i n g r e e n t r y f o r purposes of effectuating a forfeiture. and effectuate a Since Eggebrechts d i d n o t r e e n t e r forfeiture, under t h e majority rationale, they failed. L e t u s examine t h e means u s e d t o r e a c h a r e v e r s a l . Court has disagreed with t h e d e c i s i o n o f t h e United This States Supreme C o u r t i n Kern R i v e r Co. v . U n i t e d S t a t e s , s u p r a . majority opinion s t a t e s : "With r e s p e c t t o t h e f u t u r e i n t e r e s t , t h e u s e o f Severa 1 t h e t e r m 'reverter' i s c l e a r l y i n e r r o r . c a s e s have h e l d t h a t d i v e s t i t u r e u n d e r t h e A c t d o e s n o t o c c u r a u t o m a t i c a l l y upon f a i l u r e t o u s e o r r e t a i n t h e land f o r t h e purpose s t a t e d i n t h e A c t , b u t must b e d e t e r m i n e d by a l e g a l p r o c e e d i n g . H u r s t e t a l . v . Idaho-Iowa L a t e r a l and R e s e r v o i r Hurst e t a l . v. Co. ( I d a h o 1 9 2 6 ) , 246 P.23; Idaho-Iowa L a t e r a l a n d R e s e r v o i r Co. ( I d a h o 1921) , 202 P. 1068; C a r n s v . Idaho-Iowa L a t e r a l and The R e s e r v o i r Co. ( I d a h o 1 9 2 1 ) , 202 P. S t a t e s v . Whitney ( 1 9 1 0 ) , 176 F. 593 must We bear in mind that the 1-071; U n i t e d . . ." United States Supreme C o u r t was i n t e r p r e t i n g a f e d e r a l law i n t h e K e r n R i v e r c a s e and i t s d e c i s i o n i s n o t s u b j e c t t o q u e s t i o n by t h e s e v e r a l states. F u r t h e r m o r e , most o f t h e a u t h o r i t i e s c i t e d p r e d a t e t h e Kern R i v e r d e c i s i o n . In this interest States in case the the United States real property. subject patented this real had a reversionary When estate to the United Eggebrecht's predecessors, t h e y received a l l elements of f e e simple t i t l e i n c l u d i n g t h e r e v e r s i o n a r y i n t e r e s t i n t h e dominant e s t a t e . T h e r e f o r e , when t h e r e s e r v o i r c e a s e d t o b e used f o r r e s e r v o i r purposes, t i t l e r e v e r t e d t o t h e Eggebrechts. Assuming predecessors broken, arguendo subject that to a title right remained of reentry t h e Waters' for condition n e v e r t h e l e s s abandonment c o u l d h a v e o c c u r r e d . i s p r e c i s e l y what t h e t r i a l c o u r t found. is in to determine evidence whether there is That Our o n l y f u n c t i o n substantial credible i n t h e record t o support t h e finding of t h e t r i a l court. "Mere non-use The m a j o r i t y o p i n i o n h o l d s t h a t : e a s e m e n t by grant, no m a t t e r how c o n s t i t u t e abandonment." long continued, of an does n o t T h e r e i s o l d Montana law t o s u p p o r t t h a t s t a t e m e n t b u t t h e t r e n d o f d e c i s i o n s h a s been t o t r e a t non-use v. a s some e v i d e n c e o f abandonment. Pitsch (1983), 666 P.2d 215, 40 I n 79 F.anch, Inc. we held St.Rep. 981, e v i d e n c e o f e x t e n d e d non u s e c r e a t e d a r e b u t t a b l e p r e s u m p t i o n o f abandonment: "The D i s t r i c t C o u r t found t h a t t h e w a t e r r i g h t s c l a i m e d by P i t s c h and 79 Ranch had b e e n abandoned b e c a u s e t h e w a t e r had n o t been u s e d f o r a t l e a s t f o r t y , and p e r h a p s as many as sixty successive years. P i t s c h and 79 Ranch a r g u e t h a t t h e mere showing of nonuse even for a long period of time, is not sufficient to support a finding of abandonment. We disagree. "Abandonment of a water right is a question of fact. Section 89-802, Revised Codes of Montana, 1947, (applicable hero, repealed in 1973). Our scope of review is therefore limited to determining whether there is sufficient evidence to support the District Court's findings. Bagnell v. Lemery (1983), Mont , 657 P.2d 608, 40 St.Rep. 58. Forty years of nonuse is strong evidence - of an intentto abandona water right, - and, in effect, raises - rebuttable presumption a of abandonment. Because Pitsch and 79 Ranch have failed to rebut this presumption, the District Court's finding must be affirmed. " (Emphasis added) . Although we are not dealing with a water right but rather with a limited fee, it would seem analogous. Although I do not think we need to decide the question of abandonment, there is sufficient evidence in the record to support the finding of the trial court in this respect which provides further basis for affirmance. In summary, I would affirm the decision of the trial judge .

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