No. 84-118 INTHE SUPREME COURT OF THE STATE OF MONTANA 1935

E. E. EGGEBRECHT, INC., a Montana corp., Plaintiff and Respondent,

OTIS S. WATERS, et al., Defendants and Appellants.

APPEAL FROM: DistrictCourt of the SeventhJudicialDistrict, In and for theCounty of McCone, The Honorable LeRoy McKinnon, Judge presiding.

COUNSEL OF RECORD: For Appellants: Baxter Larson argued, Wolf Point, Montana

For Respondent: Garden, McCann & Schuster; Gerard M. Schuster argued, Wolf Point, Montana

Submitted: March 13, 1385 Decided: August 8, 1985

Filed: 

## lggj

### Mr. Justice John ConwayHarrison 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 and appellants. The land in question is situated inNE%, Sk, 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. The dam is located about two-thirds of a mile to the east of the boundary with Eggebrecht's land. The water backed by this dam is known as the Wolf Creek reservoir. On several occasions since 1978 the water in the reservoir has covered a portion of Eggebrechtls farmland. Since the amount of water in the reservoir depends onboth the extentof spring runoff and the amount of irrigation required onWaters' land,the number of Eggebrecht's acres flooded,aswell as the lengthof 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 Eggebrechtlsland, to 1983, the year this lawsuit was filed, the maximum amount of Eggebrecht' s farmland affected in any one yearwas twenty-five acres. Moreover, in no year was this land rendered completely unproductive. Eggebrecht

was able to seed the affected acreage after thewater 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, "Anact to repeal timber culture laws and for other purposes." 43 

### U.S.C., $5 946-949 

### (1982). Under this Act, canal companiesand irrigationdistricts, 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 ofway on thepublic 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 ofway were topass subject to the right ofway. In this case the validity of the right of way acquired by Waters' predecessor in interest is not questioned by Eggebrecht and is 

### not at issue. A copy of a 

### map of the reservoir filed as an applicationunder theAct,alongwith a copy of a letter from the InteriorDepartment indicating that the reservoirhad 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 the United States to Waters>redecessor in interest. They further agreed that the reservoir site had been used as a reservoir from 1910 (theyear the first dam

was built) to 1938 (theyear 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 abandonedby 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 natureof the reservoir right ofway thatwas granted to Waters' predecessor in interest under the March 3, 1891, Act in question. In Kern River Co. 

### v. United States (1921), 257 

### U.S. 147, 152, 42 S.Ct. 60, 62, 66 L.Ed. 175, 178, the Court stated, "Theright ofway intended by the Act

was neither amere 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 interestheld 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.eterminedby 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; Carnsv. Idaho-Iowa Lateral and Reservoir Co. (Idaho 1921), 202 P. 

### 1071; United States v. Whitney (1910), 176 F. 593. The Idaho Court inHurst (192 1) compounded the terminological error in Kern River by characterizing the future interest retained by the United States as apossibility of reverter. However, abasic element of a possibility 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)

# . American 

## -- Law of Property, Vol. 

### I, § 4.12; Boyer, Survey

## of --- the Law of Property, 3d.ed., p. 105. 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 itnotbe 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 ofway 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 rationale for this characterizationwas 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 ofway obtainedunder the 1875 Act should properly have been designated easements. It follows therefore that the designation in Kern River, that the reservoir right ofway under the 1891 Act is

a limited fee, rests on a shakey legal foundation. An analysis of the limited fee/easement distinction 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.

(8thCir. 1927), 17 F.2d 357. In that case itwas emphasized that a fee interest may be had in an easement. "We think, it, therefore, not important whether interest or estate passed be considered an easement or a limited fee. In any event it is a limited fee in the nature of an easement." 

### Big Horn Land and Cattle Co., 17 F.2d at 365. We agree. Kern 

### --- 

## - River introduced unnecessary terminological 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 1891Act. 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 ofway had been abandoned. The rule inMontana 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),52Mont. 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 constituteabandonment. City of

### Billings v. O.B. 

### Lee Co. (1975),168 Mont. 264, 542 P.2d 97. 

### Themere fact that from 1938 to 1976 no damwas inplace with which to back water onto the reservoir site does not constitute abandonment of the reservoir right ofway. Whether 38 years ofnon-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 judgmentof the DistrictCourt is reversed.

We concur:

Justices

DistrictJudge, sitting inplace ofMr. JusticeL. C. GulbrandsonMr. JusticeFred J. Weber dissentsas follows: I respectfully dissent from thebasic conclusion of the majority opinion that the question of non-use of the reservoir site can he raised only by the United States and not by the patentees and their successors in interest. I conclude that the successor in interest tothe patentee from the United States has the capacity toraise the question of

non-use

# . In concluding that it is only the United States which

can seek a forfeiture, the majority opinion relies upon Wiltbank 

### v. Lyman Water Company (Ariz.Ct.App. 1970),477 P.2d 771. There are significantdifferences between theWiltbank factsand those inthepresent case. InWiltbank, theUnited Statesgovernment simultaneously granted reservoir rights and the right to enough water to fill the reservoir to its maximum height and tokeep it filledifpossible. The issues inWiltbank included both thereservoir site and therightto thewater tofillthereservoir. The Arizona court concluded thatit would be absurd toallow a reservoirreversion tothe federal government and not include the water rights to fill it. The court further concluded that the reservoir and the necessary water rightsbothmade up the limited feewhich was retained by the United States and not granted to the patentee. Based upon that conclusion, theArizona court held that any forfeiture or abandonment is strictly an issue between the limited fee holder and the United States as the grantor with reverter rights. I do not find Wiltbank tobe persuasive authority in the present case which deals only with a reservoir site and no question has been raised as to theright totheuse of water itself. I would adopt the rationale used by the Idaho Supreme Court in Hurst v. Idaho-Iowa Lateral & Reservoir Co. (Idaho1921), 202 P. 1.068. In Hurst the appellants claimed an easement in land fora canal and reservoir granted under the

same act of Congress of March 3, 1891, described in our own

case. InHurst therespondent astheowners of the land upon which the reservoir was located, sought a declarationby the Idaho court thattheeasement in the lands had been forfeited and abandoned. In granting a new trial, the Idaho Supreme Court referred tothe contention that only the United States may act: "The contentionismade thatonlytheUnited States can take advantage of forfeiture, and that if appellant failed touse its reservoir site forthe purposes of the grant, private parties like respondents cannot quiet title in th~ absence of any action by the United States

# . . ..This is the only question which we deem it necessary to consider on this appeal." Hurst, 202 P. at 1069. The Idaho Supreme Court concluded that the disposition by patent carried all of the interest of the United States in the land, including the right to declare a reversion, stating: "We think it was the intention of Congress in making provision for the disposition of public lands, over which rights of way forreservoirs and canals have been granted subject tosuch rights of way, that suchdisposition should carrywith it all the interest of the United States in the land, including the reversion in case of breach of conditions subsequent or in case of abandonment. The natural construction of the language of the statute leads to this conclusion. No sufficient reason is suggested which requires a different construction. It is the policy of the United States tomake final disposition of its lands and subject them tothe jurisdiction of the states in which they are situated, unless some public interest requires a continuation of governmental control." Hurst. 202 P. at1070. 7: approve the foregoing analysis. There is nothing in the federal statutes or regulations which supports the majority conclusion that the right of reversion was toremain vested in the United States. There is no intention to reserve in thepatent from theUnited States. There isno publicpolicysuggested in the present case which makes a reservation appropriate. I would therefore conclude that as a result of the issuance of the United States patent, the patentee and his

successors ininteresthave succeeded totherighttoclaim aMr. Justice Frank B. Morrison, Jr. dissents as follows: I respectfullydissenttothemajority opinion. First, I believetheCourt has erred initstreatment of thereversion issue. The majority states: "In Kern River Co. 

### v. United States (192, 257 U.S. 147, 152, 42 S.Ct. 60, 62, 66 L.Ed. 175, 178, theCourt stated, 'The rightof way intended by the Act was neither a mere easement nor a fee simple absolute, but a limited feeon an implied condition of reverter i.n the event the grantee ceased touse orretainthe land forthepurpose indicated inthe act.

### "' Thus, in 1921, theUnited StatesSupreme Court held that the grant here in question was subject to a reversionary interest and inthe event the grantee ceased touse the land for reservoir purposes, the reversion would occur. The effectherewould be thatpredecessors ininteresttoWaters, when they ceased to use the land for reservoir purposes, triggered the reversion, automatically reinvesting the fee inEggebrecht's predecessors. Of course, thiswould require affirmingthe districtcourtjudgment in favor of Eggebrecht. To avoid this result the majority has treated the reversion

as a condition subsequent requiring reentry for purposes of effectuatinga forfeiture. SinceEggebrechts did notreenter and effectuate a forfeiture, under the majority rationale, they failed. Letusexamine themeans used toreach a reversal. This Court has disagreed with the decision of the United States Supreme Court inKern River Co. v. United States, supra. The majorityopinion states: "With respect to the future interest, the use of the term 'reverter' isclearly in error. Severa1 caseshave held thatdivestitureunder theActdoes not occur automatically upon failure to use or retain the land forthepurpose stated inthe Act, but must be determined 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 andReservoir Co. (Idaho 1921), 202 P. 1-071; United Statesv. Whitney (1910), 176F. 593

# ..

# ."

We must bear in mind that the United States Supreme Court was interpreting a federal law in the Kern River case and its decision is not subject toquestion by the several states. Furthermore, most of the authorities cited predate theKern River decision. In this case the United States had a reversionary interest in the subject real property. When the United States patented this real estate to Eggebrecht's predecessors, they received allelements of fee simple title including the reversionary interest in the dominant estate. Therefore, when thereservoirceased tobe used forreservoir purposes, titlereverted totheEggebrechts. Assuming arguendo that title remained in the Waters' predecessors subject to a right of reentry for condition broken, nevertheless abandonment could have occurred. That is precisely what the trialcourt found. Our only function is to determine whether there is substantial credible evidence in the record to support the finding of the trial court. The majority opinion holds that: "Mere non-use of an easement by grant, no matter how long continued, does not constitute abandonment." There isoldMontana law tosupport that statement but the trend of decisions has been totreat

non-use as some evidence of abandonment. In 79 F.anch, Inc.

v. Pitsch (1983), 666 P.2d 215, 40 St.Rep. 981, we held evidence of extended non use created a rebuttablepresumption of abandonment: "The District Court found that the water rights claimed by Pitsch and 79 Ranch had been abandoned because the water had not been used foratleastforty, and perhaps as many as sixty successive years. Pitsch and 79 Ranch argue that the mere

### showing of nonuse even for a long period of time, is not sufficient to support a finding of abandonment. We disagree. "Abandonmentof a water right is a question of fact. Section 89-802, Revised Codes ofMontana, 1947, (applicablehero, 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

# . ,657P.2d 608, 40 

### St.Rep. 58. Forty years of nonuse is strong evidence of an 

### -- intentto 

### -abandona 

### -water right, and, in - 

### - effect, raises 

### - a rebuttable presumption 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 ratherwith a 

### limited fee,itwould seemanalogous. Although I

### do not thinkwe need to decide the questionof 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

# .