Nelson v. Brooks, 329 P.3d 558 (Mont. 2014) (holding that (i) the claimants’ motion to amend a Statement of Claim was not a repudiation of the originally filed water rights claim; (ii) a claim of an existing right is prima facie proof of its contents; (iii) a water court’s determination of the type of water right should be reviewed for harmless error; and (iii) ownership of the land containing the water source is not dispositive of ownership of the water right related to that source).
This case involved a dispute over the water rights to a well (“Disputed Well”) located in the southeast quarter of a tract of Section 5 in Beaverhead County, Montana. Minerals Engineering originally drilled the Disputed Well in the 1950s, along with other wells in the area. During that time, Carl Kambich (“Kambich”) owned a ranch immediately adjacent to the Minerals Engineering site. In 1953 Minerals Engineering and Kambich entered a contractual agreement (“the Indenture”), which granted Kambich the exclusive right to a water well on “Minerals No 3 mill site mining claim.” The Indenture contained no other description of the well or its location. In 1982 Kambich filed a Statement of Claim to the Disputed Well for existing water rights. The Statement of Claim listed a priority date of January 1, 1954, a pump as the means of diversion, a flow rate of 100 gallons per minute (“gpm”), and its purpose of use as stock water. Attached to the claim was the Indenture and a copy of a 1963 Declaration of Vested Rights originally recorded by Minerals Engineering for the Disputed Well.
The Brooks bought the Kambich Ranch in 1990. Kambich filed a notice of transfer of water right for the claim to the Brooks the same year. The Brooks maintained that, beginning in 1990, the Disputed Well provided water to a barn located on the ranch. The Brooks used the water for a bathroom, kitchen, and as stock water. Later in 2006 or 2007, the Brooks converted the barn into a home for their son, and the Disputed Well is no longer its water source. The same year, the Brooks constructed a new home located in the same southeast quarter of Section 5; the Disputed Well is the water source for this home. The Brooks never filed a request to change the place of use, but claimed they had been using the Disputed Well at this location since 1993, at a trailer, while they were building their home.
In 1976 Minerals Engineering stopped its mining operations. In 2002, Apex Abrasives (“Apex”), a company organized by objector Ernest Nelson (“Nelson”), purchased the minerals interest in the land. In 2007 Nelson received a permit for mining operations on the site and later discovered the Brooks’ use of the Disputed Well. In 2011 the Brooks filed a motion to amend Kambich’s Statement of Claim. Their motion sought: (i) to amend the place of use to the current location; (ii) to change the priority date to June 15, 1953; (iii) to amend the type of right to “use” rather than “filed;” and (iv) to change the flow rate to 10 gpm. A DNRC specialist accepted all amendments, and the matter proceeded to a hearing with the Water Master. The Water Master found that the claim belonged to the Brooks, and agreed that the Brooks’ amendments should be accepted.
Pursuant to Nelson’s objection, the Montana Water Court (“water court”) reviewed the case. The water court found that the Indenture referenced a well in a different section, not Section 5, and did not convey title of the Disputed Well to Kambich. However, the water court concluded that, even though the Indenture did not convey title to Kambich, it did not affect the Brooks’ ownership of the water right. The water court found that Nelson failed to meet his burden of proof in contesting the prima facie evidence of the filed claim, and the “slight discrepancy” in the legal descriptions for the well was not determinative of ownership.
On appeal, the Montana Supreme Court (“Court”) first addressed whether Nelson ever held an adjudicated right to the Disputed Well. Nelson argued, based on two claims he held for wells in Section 5, that he had a prior adjudicated right to the Disputed Well. The Court dismissed this argument, and upheld the water court’s determination that Nelson’s previously adjudicated claims were for two different wells located on another tract of land.
The Court then addressed whether the Brooks’ motion to amend the Statement of Claim served as repudiation of the originally filed claim. Nelson argued that the Brooks repudiated the original Statement of Claim by filing a motion to amend the claim’s priority date, place of use, and amount of use. The Court, however, stated that Nelson failed to present a valid argument as to why the filing of such a motion would serve as repudiation. The Court noted that an originally filed claim is considered prima facie proof of its contents, but that the claimants have the burden to prove the requested amendments by a preponderance of the evidence. Accordingly, the Court rejected Nelson’s argument and held that the Brooks’ motion to amend did not serve as a repudiation of the original claim.
The Court then addressed whether the water court erred by relying on the Brooks’ Statement of Claim as prima facie evidence of the water right. The Court noted that a claim of an existing right “constitutes prima facie proof of its contents until the issuance of a final decree, and that an objector has the burden to prove by a preponderance of the evidence that the elements of the original claim do not reflect the actual beneficial use of the water, as it existed prior to July 1, 1973.” Nelson’s argument relied on the inference that since the mine was in operation until 1976, Minerals Engineering was likely using the Disputed Well until that time. The Court dismissed this argument, and held that the water court correctly concluded that such inferences are not sufficient to overcome the prima facie proof of a filed Statement of Claim.
The Court next addressed whether the water court erred by concluding that it did not need to consider whether the Brooks’ claimed right was a “use” right or a “filed” right. A “use right” is defined as putting water to a beneficial use without written notice, filing, or decree, whereas a “filed right” is defined as a right that has been filed and recorded prior to July 1, 1973. The Court then upheld the water court’s determination that it need not consider what type of right was in question because, as the Court concluded, in this case the type of right was immaterial because both require proof of beneficial use, and the amount of use, priority date, and purpose of use are not related to the type of right
Finally, the Court addressed whether the water court erred by concluding that ownership of the point of diversion for the claim was not dispositive of the ownership of the water right. Nelson claimed that the water court incorrectly disregarded evidence as to Apex’s ownership of the mining claim where the Disputed Well was located. The Court held that a water right is a usufructory right, rather than a physical ownership right, and therefore, “ownership of land where water has its source does not necessarily give exclusive right to such waters so as to prevent others from acquiring rights therein.” Therefore, Nelson’s claim of ownership of the mining claim where the Disputed Well was located was not dispositive of the issue of ownership of the Disputed Well’s water.
Accordingly, the Court affirmed the water court’s determination that the claim belonged to the Brooks, and that Nelson failed to prove by a preponderance of the evidence that the Brooks’ use of the Disputed Well did not accurately reflect the use as it existed prior to 1973.
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