Hoon v. Murphy

399 Mont. 110

460 P.3d 849

2020 MT 50

David M. HOON and Teri L. Hoon, Plaintiffs, Appellants, and Cross-Appellees,

v.Betty MURPHY, AS TRUSTEE FOR the IN I AM WE TRUST, and Bear Mountain LLC, Defendants, Appellees, and Cross-Appellants,Bear Mountain LLC, Peter A. Burggraff, Judy B. Burggraff, Objectors and Appellees.

DA 18-0684

Supreme Court of Montana.

Submitted on Briefs: September 25, 2019

Decided: March 3, 2020

Rehearing Denied: April 21, 2020

For Appellants: John E. Bloomquist, Bloomquist Law Firm, P.C., Helena, Montana, Holly Franz, Ryan McLane, Franz & Driscoll, Helena, Montana

For Appellees: Matthew W. Williams, MW Law, PLLC, Bozeman, Montana

Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 David and Teri Hoon (together, Hoon) appeal from the Water Court’s November 8, 2018 Order Closing Certification Case.

¶2 We restate the dispositive issues on appeal as follows:

1. Did the Water Court err in its determination of the water right claims that have historically used the Gibson-Reinig Ditch, and the characteristics of those rights?

2. Did the Water Court err by creating a junior implied claim to account for the parties’ historic use of the capacity of the Gibson-Reinig Ditch?

3. Did the Water Court err in its determination of the priority date for claim 97014-00?

4. Did the Water Court err by finding that Murphy’s unauthorized water use was irrelevant to the proceedings?

5. Did the Water Court err by separately decreeing Bay’s interest?

We affirm.

FACTUAL BACKGROUND

¶3 The South Fork of the Dearborn River (South Fork) rises on the continental divide northwest of Wolf Creek, Montana, and carries exiguous water to service modest, but meaningful, irrigation acreage. The present case originates from a distribution controversy regarding water rights sourced from the South Fork within Basin 41U. As is true for most water rights cases, the rights at issue and the parties’ present entanglement arise from a complex factual and procedural history. The following facts, taken from the Water Court trial record and the Order Closing Certification Case, provide the basis for our decision.

A. Gibson-Reinig Ditch

¶4 The Gibson-Reinig Ditch diverts water from the South Fork to three claimants relevant to this proceeding—Hoon, Betty and Gary Murphy (together, Murphy),¹ and Michael and Lisa Bay (together, Bay).² The Gibson-Reinig Ditch bears the namesake of the two disputing parties’ predecessors-in-interest: Hoon is the successor to Thomas Gibson (Gibson), and Murphy is the successor to William Reinig (W. Reinig). The point of diversion for the Gibson-Reinig Ditch is in the NWSWSW of Section 21, Township 16 North (T16N), Range 5 West (R5W) (Section 21), on the west side of the South Fork.

Hoon’s property is situated in Section 4, T16N, R5W (Section 4), and Section 33, Township 17 North (T17N), R5W (Section 33). Murphy’s property is in Sections 2 and 3, T16N, R5W (respectively, Section 2 and Section 3), and Section 34, T17N, R5W (Section 34). From its point of diversion in Section 21, the Gibson-Reinig Ditch travels northeast for a few miles to a splitter box on the Bay property in the NWNW of Section 9, T16N, R5W (Section 9). Historically, the splitter box consisted of two culverts that divided the water flowing through the Gibson-Reinig Ditch equally: half of the water diverted to the Hoon property for irrigation in Sections 4 and 33; and the other half continued along another ditch to the Murphy property for irrigation in Sections 3 and 34.³

¶5 The timeline of construction and financing of the Gibson-Reinig Ditch is gleaned from evidence in the historical record, including: Gibson’s desert land entry (DLE) documents; depositions filed by W. Reinig in 1894, 1895, and 1896 on Gibson’s behalf confirming ditch construction progress; general land office (GLO) filings by both Gibson and W. Reinig acting as witnesses for one another; and court documents and deposition testimony from 1930s water rights litigation involving Gibson and W. Reinig, where both parties confirmed W. Reinig’s involvement in the ditch’s construction. The evidence shows that construction of the Gibson-Reinig Ditch was a joint effort between the parties. The historical capacity of the Gibson-Reinig Ditch is 15.48 cubic feet per second (cfs), as ascertained by a 1987 Water Master’s report, trial testimony of Gary Murphy, and flow rate measurements from a flume installed below the Gibson-Reinig Ditch headgate in 2014.

B. Early Development and Historical Background

¶6 Gibson arrived in the above-specified area in the 1880s. By 1885, he established a homestead in parts of Section 4 to which he received a patent in 1898. On May 28, 1891, Gibson filed a notice of appropriation (NOA) for 300 miner’s inches (MI)⁴ from the South Fork, and listed Section 33 as the place of use. Then on June 15, 1891, Gibson and Daniel Pritchard (Pritchard), a neighboring homesteader, jointly filed an NOA for 500 MI from the South Fork with a June 1, 1891 priority date (Gibson-Pritchard right)—three days junior to the May 28, 1891 NOA. Both the Gibson-Pritchard right and the May 28, 1891 NOA refer to the same point of diversion and anticipate the same ditch of identical size (later named Gibson-Reinig Ditch) as the means of conveyance, although the Gibson-Pritchard right is more particular as to the course and direction of the Gibson-Reinig Ditch. The Gibson-Pritchard right named Section 33, "and other lands in the same drainage area," as the place of use. It was not until 1893 that Gibson actually acquired Section 33 from the Northern Pacific Railway. Also in 1893, Gibson used the May 28, 1891 NOA to apply for a DLE on a large portion of Section 4, notwithstanding the fact that the May 28, 1891 NOA listed the place of use as Section 33, with no reference to other proximate lands. Gibson received a patent to that DLE in 1903.

¶7 W. Reinig first acquired land in the area in 1887 or 1888. In 1895, W. Reinig purchased Pritchard’s undivided one-half interest in the Gibson-Pritchard right, although the evidence shows that W. Reinig was involved in the Gibson-Reinig Ditch construction prior to his purchase of Pritchard’s interest. W. Reinig also received an "undivided one-half interest in and to the ditches, reservoirs and flumes appertaining thereto." W. Reinig sold an undivided 1/8 interest in his half of the Gibson-Pritchard right to his brother, Frank Reinig (F. Reinig), in 1903. F. Reinig subsequently sold his 1/8 interest to Adolph Burggraff (A. Burggraff); that 1/8 interest in the Gibson-Pritchard right is currently owned by Bay.⁵ W. Reinig used his share of the Gibson-Pritchard right to irrigate land in Sections 3 and 34. By 1903, the 500 MI Gibson-Pritchard right was apportioned as follows: (1) Gibson owned a 1/2 undivided interest (250 MI or 6.25 cfs) (presently held by Hoon); (2) W. Reinig owned a 7/16 undivided interest (218.75 MI or 5.47 cfs) (presently held by Murphy); and (3) F. Reinig owned a 1/16 undivided interest (31.25 MI or 0.78 cfs) (presently held by Bay). Historical evidence indicates that for the next century, Gibson, W. Reinig, F. Reinig, and their successors used the Gibson-Pritchard right as co-owners.

¶8 In the 1930s, Gibson and W. Reinig were involved in two district court actions regarding South Fork water rights. In the first proceeding of 1936, Gibson and W. Reinig were co-plaintiffs. In the second proceeding of 1939, W. Reinig was the plaintiff and Gibson was one of the defendants. For unknown reasons, neither proceeding resulted in a decision or decree by the district court. However, evidence from the proceedings yielded valuable information relevant to the present case, including: Gibson’s deposition from the 1936 litigation; Gibson’s answer and cross complaint in the 1939 litigation; both W. Reinig and Gibson’s 1939 proposed findings of fact and conclusions of law; and W. Reinig’s deposition from the 1939 litigation. In Gibson’s prayer for relief in his 1939 answer and cross complaint, he asked the district court to:

[C]ompel all parties to th[e] action to appear and set forth their respective claims, if any, in and to the waters of said South Fork of the Dearborn River or any tributary thereof and that the court fix, determine and adjudicate the water right of th[e] defendant and the water rights, if any, of all parties to th[e] action ....

Notably, Gibson did not identify the May 28, 1891 NOA in the 1930s litigation concerning use of the waters of the South Fork. Instead, Gibson stated that he used his part of the Gibson-Pritchard right to irrigate his land in Section 33 and Section 4, in conformance with the place of use listed in the Gibson-Pritchard right’s NOA.⁶

¶9 W. Reinig died in 1950, and his ranch passed to his daughter and son-in-law, Gary Murphy’s parents. Gary was W. Reinig’s grandson, and he grew up on the ranch learning to irrigate from his grandfather. Gary eventually purchased the ranch from his parents in 1964. Gibson was grandfather to Sara Hilger. Sara and Don Hilger (together, Hilger) owned the Gibson property for several years following Gibson’s death.

C. State-wide Adjudication

¶10 In the 1980s, Murphy obtained ditch measurements for Basin 41U Temporary Preliminary Decree proceedings in the Water Court. Based on those measurements and the parties’ historical practice,⁷ Murphy successfully argued the flow rate for his statement of claim (designated 97016-00)⁸ should be 15.48 cfs. In 1987, the Water Court increased the decreed flow rate for claim 97016-00 from 12.50 cfs to 15.48 cfs based on the Water Master’s Report and Order, issued February 5, 1987.

¶11 On December 30, 1981, Hilger filed a statement of claim (designated 108084-00) under the statewide adjudication. In the filing, Hilger listed two priority dates: May 28, 1891, and June 1, 1891, and attached the two NOAs as support. Hilger claimed the Gibson-Reinig Ditch as their means of diversion, Sections 4 and 33 as their places of use, and a 250 MI flow rate—equal to their one-half...