Case Title: Schulthess v. Carollo

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1992-05-20T00:00:00Z

Document:
Schulthess v. Carollo1992 WY 58832 P.2d 552Case Number: 91-150Decided: 05/20/1992Supreme Court of Wyoming
Wallace J. SCHULTHESS, 

Petitioner,

v.

George CAROLLO and the 
State Board of Control, 

Respondents.

Appeal from District 
Court, Lincoln County, John D. Troughton, J.

Sharon M. Rose 
of Vehar, Beppler, Lavery, Rose & Boal, P.C., Evanston, for 
petitioner.

Joseph B. Meyer, 
Atty. Gen., Mary B. Guthrie, Dennis C. Cook, Sr. Asst. Attys. Gen., Frederick E. 
Chemay, Asst. Atty. Gen., Cheyenne, for 
respondents.

Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, 
JJ.

GOLDEN, 
Justice.

[¶1]      George Carollo 
(Carollo) filed a petition with the State Board of Control (Board) to have 
Wallace Schulthess' (Schulthess) original supply water rights to 116 acres and 
his supplemental supply water rights to 37.78 of the 116 acres declared 
abandoned. Following a hearing, the Board issued an order which granted 
Carollo's petition as to Schulthess' original and supplemental supply water 
rights to 37.78 acres and denied his petition as to the remaining 78.22 acres. 
Schulthess timely filed a petition for review with the district court, claiming 
that Carollo lacked standing, that the petition for abandonment was deficient, 
and that the evidence was insufficient to support the Board's order. The 
district court certified the case to this court for review. We will reverse the 
Board's order and remand the case to the Board with directions that Carollo's 
petition for abandonment be dismissed.

ISSUES

[¶2]      Schulthess raises 
the following issues for review:

A. Whether or not the 
state board of control erred in finding that defendant-contestant had standing 
to bring a petition for abandonment.

B. Whether or not 
plaintiff-contestee's property has been taken without due process of law, if 
defendant-contestant's standing to bring the petition for abandonment is based 
upon injury or benefit to a water right that was neither pled nor presented 
through evidence at the hearing on the petition for 
abandonment.

C. Whether or not 
defendant-contestant failed to prove by clear and convincing evidence that 
plaintiff-contestee had abandoned the water rights at 
issue.

Carollo and the 
Board rephrase the issues:

I. Whether George 
Carollo, petitioner below and appellee/respondent here, had standing to bring 
his petition for a declaration of abandonment on the basis of the surplus water 
right attaching, by operation of law, to his original supply water right, and if 
so, was the appellant denied due process by the Board's reliance on that surplus 
water right?

II. Whether the Board's 
decision is supported by substantial evidence?

FACTS

[¶3]      The facts of this 
case are best understood by placing them into context geographically. The water 
rights relevant to the present controversy originate from two streams, Beaver 
Creek and Ham's Fork Creek. Beaver Creek flows in a southwesterly direction and 
is a tributary of Ham's Fork Creek. Ham's Fork Creek flows in a southeasterly 
direction. Upon convergence, the two streams form what is best illustrated by 
the letter "Y" - the right branch of the "Y" representing Beaver Creek, the left 
branch of the "Y" representing the upper Ham's Fork Creek, and stem of the "Y" 
representing the lower Ham's Fork Creek.

[¶4]      Schulthess owns 
an original supply water right with a priority date of January 20, 1916, for the 
diversion of water from the upper Ham's Fork Creek into the Johnson-Spencer 
Ditch for stock watering purposes and for the irrigation of 116 acres. 
Schulthess also owns a supplemental supply water right with a priority date of 
January 28, 1931, for the diversion of water from Beaver Creek into the Enlarged 
Johnson-Spencer Ditch for the irrigation of 37.78 of the 116 acres. The 116 
acres to which Schulthess' water rights appertain are located southeast of both 
Ham's Fork Creek and Beaver Creek. Historically, water diverted from the upper 
Ham's Fork Creek traversed the land between the point of diversion and Beaver 
Creek via the Johnson-Spencer Ditch, was flumed across Beaver Creek, and 
continued in the Enlarged Johnson-Spencer Ditch until reaching the 116 acres. In 
1932, the point of diversion and means of conveyance for the original supply 
water appurtenant to 78.22 of the 116 acres were changed from the 
Johnson-Spencer Ditch to the Smith No. 1 Ditch. The Smith No. 1 Ditch diverts 
water from the lower Ham's Fork Creek and provides a more direct route for the 
irrigation of the 78.22 acres.

[¶5]      Carollo owns an 
original supply territorial water right with a priority date of May 15, 1889, 
for the diversion of water from Beaver Creek into the East Stock Ditch for 
irrigation purposes. Based on his water right in Beaver Creek, Carollo 
petitioned the Board to declare as abandoned Schulthess' original supply water 
right from Ham's Fork Creek and his supplemental supply water right from Beaver 
Creek. Carollo alleged that Schulthess had failed to apply the subject water to 
beneficial use for the period of five years and that he, Carollo, would be 
benefitted by a declaration of abandonment. The Board considered Carollo's 
petition for abandonment at a regular board meeting and referred it for public 
hearing.

[¶6]      A public hearing 
was then held at which both Carollo and Schulthess presented evidence relative 
to whether Schulthess had beneficially used his original or supplemental supply 
water rights in the previous five years. Both prior to and following the 
presentation of the evidence, Schulthess moved to have Carollo's petition for 
abandonment dismissed or denied on the ground that Carollo, possessing the 
senior water right, lacked standing under Wyo. Stat. § 41-3-401(b)(i) (Supp. 
1990). Wyo. Stat. § 41-3-401(b)(i) has, at all relevant times, conferred 
standing upon "[a]ny person who has a valid adjudicated water right or is the 
holder of a valid permit from the same source of supply which is equal to or 
junior in date of priority to the right for which abandonment is sought." 

[¶7]      Following the 
hearing, the Board issued its findings of fact, conclusions of law, and order 
granting in part and denying in part Carollo's petition for abandonment. The 
Board determined initially that Carollo had standing to bring the petition for 
abandonment. The Board made this determination by judicially noticing that a 
surplus water right with a priority date of March 1, 1945, attached by operation 
of law to Carollo's Beaver Creek water right. Using the March 1, 1945 priority 
date, the Board concluded that Carollo, possessing a water right junior to those 
he sought to abandon, had standing under Wyo. Stat. § 41-3-401(b)(ii). Wyo. 
Stat. § 41-3-401(b)(ii) has, at all relevant times, conferred standing upon 
"[t]he holder of a valid water right entitled to surplus water under W.S. 
41-4-318 through 41-4-324, petitioning to abandon a water right from the same 
source of supply if the right sought to be abandoned has a priority date of 
March 1, 1945, or earlier." The Board then determined that the evidence was 
sufficient to grant Carollo's petition of abandonment as it pertained to 
Schulthess' original and supplemental supply water rights to irrigate 37.78 of 
the 116 acres. The Board denied Carollo's petition as to that portion of 
Schulthess' original supply water right that had been changed to the Smith No. 1 
Ditch for the irrigation of the remaining 78.22 acres.

[¶8]      Schulthess timely 
filed a petition for review with the district court. In his petition, Schulthess 
averred that Carollo lacked standing, that his abandonment petition was 
deficient, and that the evidence was insufficient to support the Board's order. 
The district court certified the case directly to this court for review pursuant 
to Wyo. R.App.P. 12.09.

STANDARD OF 
REVIEW

[¶9]      When an 
administrative case is certified to this court pursuant to Wyo. R.App.P. 12.09, 
we review the decision "under the appellate standards applicable to a reviewing 
court of the first instance." Amax Coal v. State Bd. of Equalization, 819 P.2d 825, 828 (Wyo. 1991) (quoting Application of Campbell County, 731 P.2d 1174, 
1175 (Wyo. 1987)). The scope and standards of administrative review are well 
known and need not be recited in detail. Suffice it to state that our general 
objective is to determine whether the agency's decision is supported by 
sufficient findings of fact, whether the findings of fact are supported by 
sufficient evidence, and whether it is in accordance with the law.1

DISCUSSION

[¶10]   The primary issue raised for our 
consideration is whether the Board erred in concluding that Carollo had standing 
to petition for an abandonment of Schulthess' water rights. This issue cannot be 
addressed, however, without first considering whether the Board made findings of 
fact sufficient to provide this court with a rational basis for judicial review. 
See Wyo. Stat. § 16-3-110 (July 1990); FMC v. Lane, 773 P.2d 163 (Wyo. 1989). 
Therefore, our initial task is to revisit the doctrine of standing both 
generally and as it applies to an abandonment proceeding to identify what 
findings of fact the Board must make before concluding that a petitioner has 
standing. We must then examine the Board's order to determine if such findings 
of fact were adequately made, and, if so, whether they were supported by 
substantial evidence.

[¶11]   The doctrine of standing is a 
jurisprudential rule of jurisdictional magnitude. At its most elementary level, 
the standing doctrine holds that a decision-making body should refrain from 
considering issues in which the litigants have little or no interest in 
vigorously advocating. Washakie Co. Sch. Dist. No. One v. Herschler, 606 P.2d 310, 317 (Wyo. 1980), cert. denied, 449 U.S. 824, 101 S. Ct. 86, 66 L. Ed. 2d 28. 
Accordingly, the doctrine of standing focuses upon whether a litigant is 
properly situated to assert an issue for judicial or quasi-judicial 
determination. Laramie Rivers Co. v. Wheatland Irr. Dist., 708 P.2d 20, 27 (Wyo. 
1985). A litigant is said to have standing when he has a "personal stake in the 
outcome of the controversy." This personal stake requirement has been described 
in Wyoming as a "tangible interest" at stake. The tangible interest requirement 
guarantees that a litigant is sufficiently interested in a case to present a 
justiciable controversy. Laramie Rivers, 708 P.2d  at 27 (quoting Int'l Ass'n 
Fire Fighters v. Civil Serv. Comm'n, 702 P.2d 1294, 1297-98 (Wyo. 
1985)).

[¶12]   This court has not addressed the 
issue of what is required to establish standing in an abandonment proceeding 
since the 1985 amendments to Wyo. Stat. § 41-3-401(b) (1977). Before 1985, § 
41-3-401(b) (1977) simply conferred standing upon "any water user who might be 
affected by a declaration of abandonment." We interpreted this language to 
require that a petitioner for abandonment allege and prove an injury to his 
water right due to another appropriator's misuse or nonuse of water. Cremer v. 
State Bd. of Control, 675 P.2d 250, 256 (Wyo. 1984) (alleged benefit from 
abandonment to surplus water right insufficient to confer standing); Platte 
County Grazing Ass'n v. State Bd. of Control, 675 P.2d 1279, 1283-84 (Wyo. 1984) 
(alleged benefit from abandonment to base water right insufficient to confer 
standing).

[¶13]   In response to this court's 1984 
decisions, the Wyoming legislature amended Wyo. Stat. § 41-3-401(b) (1977) to 
confer standing on "any water user who might be benefitted by a declaration of 
abandonment of existing water rights or who might be injured by the reactivation 
of the water right." 1985 Wyo. Sess. Laws ch. 203, § 1 (codified at Wyo. Stat. § 
41-3-401(b) (Supp. 1991)). The legislature went on to specify that the following 
persons would have standing to petition the Board for a declaration of 
abandonment:

(i) Any person who has a 
valid adjudicated water right or is the holder of a valid permit from the same 
source of supply which is equal to or junior in date of priority to the right 
for which abandonment is sought; or

(ii) The holder of a 
valid water right entitled to surplus water under W.S. 41-4-318 through 
41-4-324, petitioning to abandon a water right from the same source of supply if 
the right sought to be abandoned has a priority date of March 1, 1945, or 
earlier.

Id.

[¶14]   It is a cardinal rule of statutory 
construction that statutes must be construed so that no part is rendered 
inoperative or superfluous. State ex. rel. Wyoming Worker's Comp. Div. v. 
Mahoney, 798 P.2d 836, 838 (Wyo. 1990). Accordingly, we read Wyo. Stat. § 
41-3-401(b), as amended, to confer standing to petition for abandonment upon a 
water user who alleges and proves three essential facts: (1) that he possesses a 
valid water right of equal or junior status to the water right sought to 
be abandoned; (2) that the water right relied upon by the petitioner and the 
water right for which a declaration of abandonment is sought are from the 
same source of supply; and (3) that the petitioner stands to 
benefit from a declaration of abandonment or to sustain 
injury by reactivation of the contested water right. Corresponding 
findings of fact, adequately supported, must also be made by the Board to 
conclude properly that a petitioner has standing and that the Board has 
jurisdiction to consider a petition for abandonment. See Wyo. Stat. § 16-3-110 
(July 1990); Pan Am. Petroleum Corp. v. Wyoming Oil & Gas Conservation 
Comm'n, 446 P.2d 550, 555 (Wyo. 1968).

[¶15]   A review of the Board's order in 
this case reflects that it failed to make the findings of fact necessary to 
support the conclusion that Carollo had standing to contest Schulthess' water 
rights. The Board made four findings of fact relative to the standing issue, 
which, for the purpose of logical progression, will be cited out of 
order:

12. THAT the petitioner 
is the owner of original Territorial direct flow water rights on lands described 
in an adjudicated appropriation that was of record in the office of the State 
Board of Control, bearing a priority as of May 15, 1889.

10. THAT the petitioner 
is the holder of a valid water right entitled to surplus water under W.S. 
41-4-318 through 41-4-324, from the same source of supply.

13. THAT the water rights 
sought to be abandoned have priority dates of January 20, 1916 and January 28, 
1931.

11. THAT the petitioner 
(contestant) has standing as provided by W.S. 41-3-401(b) to petition the  1-b above.

[¶16]   The Board was first required to 
find that Carollo possessed a valid water right of equal or junior status to 
Schulthess' water rights. The Board made adequate findings of fact in this 
regard both as to Schulthess' Ham's Fork Creek and Beaver Creek water rights. 
The Board initially found that Carollo owned a valid territorial water right 
with a priority date of May 15, 1889, to which a surplus water right with a 
priority date of March 1, 1945, attached as a matter of law. The Board then 
noted that Schulthess' water rights had priority dates senior to the priority 
date of Carollo's surplus water right. These facts are not disputed by the 
parties.

[¶17]   The Board was next required to find 
that Carollo's surplus water right from Beaver Creek was from the same source of 
supply as Schulthess' water rights. On this account, the Board made insufficient 
findings of fact. The Board merely stated in finding of fact No. 12 that 
Carollo's surplus water right was from "the same source of supply." There is no 
dispute among the parties and little question in our mind that Carollo's surplus 
water right from Beaver Creek and Schulthess' supplemental supply water right 
from Beaver Creek are from the same source of supply. There is, however, great 
question as to how or why the Board determined that Carollo's Beaver Creek water 
right is from the same source of supply as Schulthess' original supply water 
right from Ham's Fork Creek.

[¶18]   Carollo suggests that we interpret 
the words "same source of supply" which are employed in Wyo. Stat. § 
41-3-401(b)(i) & (ii) to mean "same stream system." Carollo argues that, 
given such an interpretation, the Board was justified in finding that 
Schulthess' Ham's Fork Creek water right was from the same source of supply as 
Carollo's water right from Beaver Creek. We respectfully decline Carollo's 
invitation on the ground that statutory language is to be given its plain and 
ordinary meaning absent some contrary indication by the legislature. Wyo. Stat. 
§ 8-1-103(a)(i) (June 1989); DiVenere v. Univ. of Wyoming, 811 P.2d 273, 275 
(Wyo. 1991). We find nothing in Wyo. Stat. § 41-3-401(b) specifically, or in 
Title 41 generally, to indicate that the legislature intended that the words 
"same source of supply" mean "same stream system." Quite to the contrary, our 
review of Title 41 demonstrates that "stream system" and "source of supply" are 
terms of art employed by the legislature depending upon the result to be 
achieved. Compare Wyo. Stat. § 41-4-318 (1977), Wyo. Stat. § 41-4-329 (Supp. 
1991), and Wyo. Stat. § 41-3-601 (1977) with Wyo. Stat. § 41-3-107 (Supp. 1991), 
Wyo. Stat. § 41-3-114 (Supp. 1991), and Wyo. Stat. § 41-3-401 (Supp. 1991). 
Accordingly, we attribute to the words "same source of supply" their plain and 
ordinary meaning. Doing so, we understand the phrase to require that a 
petitioner for abandonment allege and prove that the respondent's water right, 
if not from an identical water source, is from a water source which contributes 
significantly to the water source upon which the petitioner relies to satisfy 
his appropriation.

[¶19]   Wyo. Stat. § 16-3-110 requires in 
pertinent part that "[f]indings of fact if set forth in statutory language, 
shall be accompanied by a concise and explicit statement of the underlying facts 
supporting the findings." Expounding upon this language, this court has stated 
"[i]t is insufficient for an administrative agency to state only an ultimate 
fact or conclusion, but each ultimate fact or conclusion must be thoroughly 
explained in order for a court to determine upon what basis each ultimate fact 
or conclusion was reached. The court must know the why." Geraud v. Schrader, 531 P.2d 872, 879 (Wyo. 1975), cert. denied, 423 U.S. 904, 96 S. Ct. 205, 46 L. Ed. 2d 134 (1975) (emphasis added). In the instant case, the question why lingers: Why 
did the Board find that Carollo's Beaver Creek water right and Schulthess' Ham's 
Fork Creek water right are from the same source of supply? Absent a "concise and 
explicit statement of underlying facts" to support the Board's finding on this 
regard, we are left with an insufficient basis for proper judicial review. Wyo. 
Stat. § 16-3-110; See also, FMC, 773 P.2d  at 165.

[¶20]   Finally, the Board was required to 
find Carollo stood to benefit from the abandonment of Schulthess' water rights 
or to suffer injury if Schulthess resumed use of the allegedly abandoned water 
rights. The Board entirely failed to make any findings of fact relative to this 
standing requirement. Consequently, we are once again left with an insufficient 
basis for judicial review. FMC, 773 P.2d  at 165.

[¶21]   Carollo nevertheless argues that we 
should uphold the Board's conclusion regarding standing because he theoretically 
stood to benefit from the abandonment of Schulthess' water rights. Carollo 
reasons that, if Schulthess' water rights were abandoned, there would be more 
unappropriated water in the stream system and a greater chance that he would be 
able to satisfy his surplus water right. While Carollo's argument may be true in 
theory, we note that there are no findings of fact in the Board's order or 
evidence in the record to substantiate the claim in fact. We also note that a 
litigant's brief or oral argument is no substitute for a proper agency decision. 
Geraud, 531 P.2d  at 880.

[¶22]   Consistent with Wyoming's general 
law of standing, this court, and others, has repeatedly interpreted Wyoming's 
abandonment statutes to require that a petitioner have a "tangible" as opposed 
to a "theoretical" interest at stake to establish standing. See, e.g., Hagie v. 
Lincoln Land Co., 18 F. Supp. 637, 639 (D.Wyo. 1937) (standing not recognized on 
theory alone); Laramie Rivers Co. v. Wheatland Irr. Dist., 708 P.2d 20, 30 (Wyo. 
1985) (standing recognized upon demonstration of injury or threat of inevitable 
injury); Horse Creek Conservation Dist. v. Lincoln Land Co., 54 Wyo. 320, 342, 
92 P.2d 572, 580 (1939) (door is not open for just anybody to initiate 
abandonment proceedings). Under Wyoming's present abandonment statute, the 
"tangible interest at stake" requirement necessitates that Carollo allege and 
prove a reasonable likelihood that the abandonment of Schulthess' water rights 
will either benefit or injure his surplus water right. See Wyo. Stat. § 
41-3-401(b).

[¶23]   In summary, the Board failed to 
make findings of fact sufficient to support its conclusion that Carollo had 
standing to press or that the Board had jurisdiction to entertain Carollo's 
petition for the abandonment of Schulthess' water rights. Absent sufficient 
factual findings, this court lacks a proper foundation upon which to conduct 
further judicial review. Consequently, we hold that the Board's order, which 
granted in part and denied in part Carollo's petition for abandonment, was 
issued in a manner which was both arbitrary and capricious and contrary to the 
law. See Mountain Fuel Supply Co. v. Public Serv. Comm'n, 662 P.2d 878, 887-88 
(Wyo. 1983).

[¶24]   Having disposed of the case as 
above-stated, it is not necessary that we give in-depth consideration to 
Schulthess' issues regarding due process of law or sufficiency of the evidence 
of abandonment. We note, however, that it is incumbent upon a water user to both 
allege in his petition for abandonment and prove at a subsequent hearing the 
facts necessary to establish standing and confer the Board with jurisdiction. 
That did not happen in this case. Contrary to the requirements of Wyo. Stat. § 
41-3-401(b), Carollo relied upon his territorial water right both in his 
petition and at the hearing to abandon the junior water rights of Schulthess. 
The Board erred in the first instance by not dismissing Carollo's petition as 
deficient and in the second instance by judicially noticing Carollo's surplus 
water right as the basis for standing without notifying the parties and 
affording an opportunity for an additional hearing. See Wyo. Stat. § 16-3-108(d) 
(July 1990).

CONCLUSION

[¶25]   Wyo. Stat. § 41-3-401(b) confers 
standing only upon those water users who allege and prove three essential facts: 
(1) equal or junior status; (2) same source of supply; and (3) benefit or 
injury. Corresponding findings of fact, adequately supported, must also be made 
by the Board. In the instant case, both Carollo and the Board failed to carry 
their respective burdens. Consequently, the Board's order, which granted in part 
and denied in part Carollo's petition for a declaration of abandonment of 
Schulthess' water rights, is reversed. The case is remanded to the Board with 
directions that Carollo's petition for abandonment be 
dismissed.

FOOTNOTES

1 For a more 
in-depth exposition of the applicable standard of review, see, e.g., Amax Coal 
v. State Bd. of Equalization, 819 P.2d 825, 828-29 (Wyo. 1991); Mekss v. Wyoming 
Girl's School, 813 P.2d 185, 200-02 (Wyo. 1991) cert. denied, ___ U.S. ___, 112 S. Ct. 872, 116 L. Ed. 2d 777 (1992).