No. 87-528 

88-92 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

IN THE MATTER OF THE ADJUDICATION OF 87-528 

THE EXISTING RIGHTS TO THE USE OF ALL 

THE WATER, BOTH SURFACE AND UNDERGROUND, 

WITHIN THE SAGE CREEK DRAINAGE AREA, 

INCLUDING ALL TRIBUTARIES OF THE SAGE 

CREEK IN LIBERTY AND HILL COUNTIES, MONTANA. 

IN THE MATTER OF THE ADJUDICATION OF THE 

EXISTING RIGHTS TO THE USE OF ALL THE WATER, 

BOTH SURFACE AND UNDERGROUND WITHIN THE BOULDER 

RIVER DRAINAGE AREA INCLUDING ALL TRIBUTARIES 

OF THE BOULDER RIVER, TRIBUTARY OF THE YELLOWSTONE 

RIVER, IN SWEET GRASS AND PARK COUNTIES, MONTANA. 

APPEAL FROM: The Water Court of the State of Montana 

The Honorable W. W. Lessley, Judge presiding. 

COUNSEL OF 

For 

For 

0 

Filed: cC3 

RECORD : 

Appellant: 

Moore, Rice, O'Connell & Refling; David Moon argued, 

Bozeman, Montana 

J. David Penwell argued, Bozeman, Montana 

Respondent: 

Lilly, Andriolo & Schraudner; Leanne Schraudner argued, 

Bozeman, Montana 

Matthew W. ~illiams, Bozeman, Montana 

Edward Borer, Great Falls, Montana 

Keith Tokerud argued, Great Falls, Montana 

kenneth P. Pitt, Asst. U.S. Atty., Missoula, Montana 

i3ileen Shore, Dept. Fish, Wildlife & Parks, Helena 

'%inda Hickman, Water Master, Bozeman, Montana 

. . !'hohn R. Hill, Jr. argued, U.S. Dept. ~ustice, Denver, , : ; Colorado 111 . . - 1 :_I 

C, 0 

- t' 

- - ,- Submitted: September 13, 1988 

u 

k Decided: October 11, 1988 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

We determine in these cases consolidated for appeal that 

there is no right of appeal granted to a water right claimant 

under the state water rights adjudication process [§ 

85-2-201, -243, MCA] , except from a final decree entered 

under S 85-2-234, MCA; that the Montana Rules of Civil 

Procedure are included in the rules that govern the practice 

of the Water Courts [Rule 1.112 , Water Claims Examination 

Rules]; that Rule 54 (b) of the Montana Rules of Civil 

Procedure provides for and allows a water right claimant to 

seek and procure from the Water Court an express direction 

for the entry of a final judgment as to his water right 

claim, upon the express determination of the Water Court that 

there is no just reason for delay; and that such action of 

the Water Court under Rule 54(b) would be and constitute a 

final judgment within the meaning of 5 85-2-235, MCA, 

providing for appeals from the Water Court. 

In each of the above captioned cases, we were presented 

with the common issue of the appealability from an 

interlocutory order of the Water Court. Since we have not 

before spoken on this precise issue, we consolidated the 

captioned cases for disposal as to that issue, reserving 

decision if need be on the remaining issues on each cause. 

Oral argument was granted and heard on the common issue of 

appealability and now, having fully considered the matter, we 

determine that in each case the appeal must be dismissed, 

subject to further proceedings in the Water Court as 

hereafter discussed. 

NO. 87-528 (SAGE CREEK) 
Rambo Grain and Cattle Company, the Lazy DX Ranch, and 

Terry and Mary Stevenson separately appeal from an order of 

the Water Court, dated October 18, 1987, modifying an earlier 

temporary preliminary decree entered in the Sage Creek 

Drainage adjudication, holding that the doctrine of 

collateral estoppel bars these appellants from claiming any 

water rights different from those found in an earlier 

District Court judgment outside the Water Court. 

Sage Creek Colony has also appealed, and Burkhartsmeyer 

Land Company has cross-appealed, though these parties appear 

to be content with the October 18, 1987 order of the Water 

Court. 

In 1974, Burkhartsmeyer, Rambo, Stevenson (now Lazy DX 

Ranch) and Black Butte Ranch (not a party to the appeal) 

filed a complaint in the District Court, Twelfth Judicial 

District, Hill County, under § 85-2-406(2), MCA, against Sage 

Creek Colony. The plaintiffs in that case claimed that Sage 

Creek Colony was interfering with their water rights in Sage 

Creek. All of the parties relied on notices of appropriation 

to establish their respective water rights. The Hon. W. W. 

Lessley, sitting in 1982 as a district judge in that case, 

made findings of fact and conclusions of law. The court 

determined that Sage Creek Colony had the earliest priority 

dates established in 1890 and 1891. Rambo and Burkhartsmeyer 

were accorded one early right each, with a priority date of 

1898. Other water rights claimed by Rambo, Burkhartsmeyer 

and Stevenson were denied by the District Court because the 

alleged current places and uses of the waters failed to match 

the land described in the prior notices. 

No appeal by any party was taken from the District Court 

judgment entered under S 85-2-406(2), MCA. Later, in the 

Water Court proceedings adjudicating the Sage Creek Drainage 

area, a preliminary decree was issued on December 29, 1983 by 
the Water Court. The preliminary decree was ordered changed 

by the Water Court on August 27, 1984, to a "temporary 

preliminary decree." Objections to the temporary preliminary 

decree were filed by Burkhartsmeyer, Rambo, Sage Creek 

Colony, and other parties. Burkhartsmeyer objected that the 

water rights accorded the parties by the 1982 decree in the 

District Court action had not been included in the temporary 

preliminary decree of the Water Court. After hearing, the 

water master prepared a report and Judge Lessley, by order, 

adopted the report on October 18, 1987, which conformed the 

parties' rights to water in Sage Creek pursuant to the 1982 

District Court decree. The Water Court held that collateral 

estoppel applied to these parties as between themselves 

because of the 1982 decree in the District Court action, and 

that the rights of the parties as between themselves had 

there been finally adjudicated. 

Sage Creek appealed from the Water Court order; Rambo 

followed suit, as did the Stevensons. Burkhartsmeyer also 

filed a notice of appeal. 

Rambo and Stevenson both contend that appeal in this 

case should lie. Sage Creek and Burkhartsmeyer each contend 

that an appeal does not lie. 

Sage Creek argues that the Water Court order of October 

18, 1987 is clearly interlocutory and settles a very narrow 

issue, whether collateral estoppel bars these parties from 

further litigating their water rights in the Water Court. It 

contends that the only appeal permitted in Water Court 

proceedings is from a final decree entered under B 85-2-234, 

PICA, for which the right of appeal is granted in S 85-2-235, 

MCA. 

Burkhartsmeyer likewise contends that an appeal does not 

lie from an interlocutory order. It cites Bostwick v. 

Department of Highways (1980), 188 Mont. 313, 613 P.2d 997, 
and distinguishes our earlier decisions in State ex rel. 

Greely v. Water Court (Mont. 19841, 691 P.2d 833, 41 St.Rep. 

2373; and Esther McDonald v. State of Montana (Mont. 19861, 

722 P.2d 598, 43 St.Rep. 1397. Burkhartsmeyer further 

contends that S 85-2-235, MCA, is not ambiguous and that no 

appeal lies in Water Court proceedings except from a final 

decree. 

On the other hand, Rambo argues that an appeal should 

lie in this case because as to these parties, the decision of 

the Water Court applying collateral estoppel is a "final 

decree" of their water rights, since they cannot litigate any 

further. Rambo also argues that a literal reading of 5 

85-2-235, MCA, makes no sense now and will cause backlogs in 

the Supreme Court when final decrees are finally entered in 

the various basins of Montana. 

Stevensons and the Lazy DX Ranch also argue that their 

rights are now definitely resolved by the Water Court, that 

the objection deadlines for water rights in the temporary 

preliminary decree for Sage Creek is now over and hence there 

can be no subsequent attack on these particular uses. 

Stevensons then argue that unless an appeal is now allowed, 

the result would be waste, duplication of effort, and overall 

uncertainty which cannot be the legislative intent under S 

85-2-234, MCA. 

NO. 88-092 (BOULDER RIVER DRAINAGE) 

In the Boulder River Drainage adjudication, Don C. 

Cowles appeals from an order of the Water Court, dated 

January 13, 1988 by the Hon. . W. Lessley, Chief Water 

Judge, holding that water rights claimed by Cowles for 

certain mining rights ". . . have been abandoned and such 

shall be removed from the temporary preliminary decree of 

existing water rights in the Boulder River, tributary of the 

Yellowstone River Basin." 
United States of America, as appellee, has moved to 

dismiss the appeal of Cowles to this Court for lack of 

jurisdiction. The United States contends that a temporary 

preliminary decree is but a preliminary step to the final 

adjudication of water rights in the Boulder River Basin. 

Water Court Rule No. 1. I1 (7) provides that any decree of the 

Water Court which is not a final decree under 5 85-2-234, 

MCA, shall be considered a temporary preliminary decree or 

interlocutory decree. The United States contends that a 

party may not appeal from an interlocutory or non-final 

order. Blevins v. Kramer (1978), 179 Mont. 193, 587 P.2d 28. 

It argues that absent an express determination by the Water 

Court of no just reason for delay or an express direction for 

the entry of a final judgment, this Court lacks jurisdiction 

to entertain an appeal. Knoepke v. Southwestern Railway 

Company (1979), 182 Mont. 74, 595 P.2d 376. The federal 

government relies particularly upon Roy v. Neibauer (19801, 

188 Mont. 81, 610 P.2d 1185 for its contentions that a 

temporary preliminary decree is not a final judgment 

appealable under the Montana Rules of Appellate Civil 

Procedure; that when premature appeals are brought in this 

Court, it is the duty of the parties to bring the lack of 

jurisdiction to the attention of the Court, and that if the 

appeal is now allowed, it might again face the same issue 

when a final decree is entered in the Boulder River basin. 

DISCUSSION 

A right of appeal exists only by statute or rule, and 

without a supporting statute or rule, there can be no appeal. 

State ex rel. Adamson v. District Court, Fourth Judicial 

District, Lake County (1955), 128 Mont. 538, 279 P.2d 691; 

McClurg v. Flathead County Commissioners (19781, 179 Mont. 

518, 587 P.2d 415. The right of appeal is purely statutory. 
Sheridan County Electric Coop v. Anhalt (19531, 127 Mont. 71, 

257 P.2d 889. 

The statutory provision for the entry of a final decree 

in water right claims adjudication is found in S 85-2-234, 

MCA. The only right of appeal expressed in the statutes 

pertaining to Water Court adjudications is found in S 

85-2-235, MCA. We offer that statute for examination: 

A person whose existing rights and priorities are 

determined in the final decree may appeal the 

determination only if: 

(1) he requested a hearing and appeared and 

entered objections to the preliminary decree; or 

(2) his rights as determined in the preliminary 

decree were altered as the result of a hearing 

requested by another person. 

An interlocutory order is normally not appealable unless 

there is a specific provision making it so. State ex rel. 

Kesterson v. District Court, Fourth Judicial, Missoula County 

(1980), 189 Mont. 20, 614 P.2d 1050; Schultz v. Adams (19731, 

161 Mont. 463, 401 P.2d 530. 

Under the Water Court rules, which we have promulgated, 

we have defined "final decree," "temporary preliminary 

decree," and "preliminary decree." 

"Final Decree" means the final Water Court 

determination of existing water rights within a 

basin or subbasin, as described in S 85-2-234, MCA. 

(Rule 1 111 2 , Montana Water Right Claims Examinations 

Rules. 1 

"Temporary Preliminary Decree" means a water court 

decree, prior to the issuance of the preliminary 

decree, as necessary for the orderly administration 

of existing water rights pursuant to Section 

85-2-231, MCA. 

(Rule 1. I11 (511, Rules, supra.) 
"Preliminary Decree" means the preliminary water 

court determination of existing water rights within 

a basin or subbasin or described in section 

85-2-231, MCA, which precedes the final decree. 

(Rule 1,111 (43), Rules, supra.) 

The Rules contemplate that the Water Court, by an order, 

can designate a temporary preliminary decree to assume the 

effect of a preliminary decree: 

The Water Court may order that any temporary 

preliminary decree or other interlocutory decree 

heretofore or hereafter entered in any action 

pending before the Water Court, as amended by the 

inclusion of a determination of Indian or Federal 

Reserved water rights, shall be and constitute a 

preliminary decree in accordance with 85-2-231, 

MCA, and the procedures related to preliminary 

decrees set forth in SS 85-2-231, 85-2-232, 

85-2-233, 85-2-234, shall thereafter occur with 

respect to such preliminary decree. 

Rule 1.11(7), Rules, supra-) 

The parties contending here for a right of appeal point 

to State ex rel. Greely v. Water Court and Esther McDonald v. 

State of Montana, supra., wherein, because of exigent 

circumstances, we accepted jurisdiction of cases involving 

the Water Court before entry of a final decree. In those 

cases, however, we had problems of statewide impact and our 

jurisdiction was founded upon our power of supervisory 

control of the Water Courts. Moreover, those decisions 

affected many adjudications and not the narrowly defined 

issues that are presented in the cases before us now. 

We recognize, too, the difficulties faced by the 

proposed appellants in these consolidated cases. In Cowles' 

case, a final determination as to his water rights for his 

mining claims is essential to him. In the Sage Creek 

drainage case, if appeal is not allowed now, objections to 

the collateral estoppel doctrine are postponed until a final 
decree is entered on Sage Creek. In water adjudication 

matters, final decrees may yet be a long way off. 

However, we have no jurisdiction to entertain these 

appeals, and if we accepted them, we would open the door to 

appeals from every interlocutory order made by the Water 

Courts in the thousands of adjudications being made there. 

We are helped to a final disposition of these proposed 

appeals by our decision in Hill v. Ferrimac Cattle Company, 

Inc. (1984), 211 Mont. 479, 687 P.2d 59, 65. In that case, 

an original action was brought in the District Court, Tenth 

Judicial District, Judith Basin County by Merrimac against 

Hill, alleging trespass and seeking injunctive relief and 

damages for Hill's actions. Hill had already filed an action 

in Water Court to determine the priorities of the rights of 

the parties to the streams in question. The Water Court 

determined their respective water rights first, while the 

trespass and damage claims were reserved in the separate 

District Court action until the final determination of the 

water rights litigation. In that case, Merrimac argued on 

appeal from the Water Court adjudication between the parties 

that we had no jurisdiction because there was no final decree 

under 5 85-2-235, MCA. We retained jurisdiction, however, 

and decided the appeal, because the Water Court had entered a 

Rule 54(b) certification, because the dispute involved only 

two parties who had to know their water allowances, and 

because the remaining issues pending in the District Court 

could not be decided until the Water Court issues had been 

determined, which affected the parties' right to a speedy 

trial. 

The Montana Rules of Civil Procedure are a part of the 

rules governing the practice in the Water Courts: 

Application of other rules; admissibility -- of DNRC 

Data. ~xce~t-as where specifically provided for in 
these rules, the Montana Rules of Civil Procedure 

(M. R.Civ.P. , the Montana Rules of Evidence 

(M.R.Evid.) and the Supreme Court of Montana, 

Uniform Court Rules for Local District Courts 

govern the practice of the water courts. 

Rule 1.11(2), Water Claims Examination ~ules. 

Under the rules therefore, a water right claimant who is 

a litigant before the Water Court has the right to move in 

the Water Court for a Rule 54(b) certificate when the 

litigant is adversely affected by an interlocutory order or a 

temporary preliminary decree of the Water Court. Rule 54(b), 

M.R.C~V.P., provides: 

Judgment upon multiple claims or involvinq multiple 

parties. When multiple claims for relief or 

multiple parties are involved in an action, the 

court may direct the entry of a final judgment as 

to one or more but fewer than all the claims or 

parties only upon the express determination that 

there is no just reason for delay and upon an 

express direction for the entry of judgment. In 

the absence of such determination and direction, 

any order or form of decision, however designated, 

which adjudicates less than all the claims or 

rights of liabilities of all the parties shall not 

terminate the action as to any of the claims or 

parties, and the order or other form of decision is 

subject to revision at any time before the entry of 

judgment adjudicating all the claims and rights and 

liabilities of all the parties. 

From the provisions of Rule 54 (b) , we can see that its 

purpose is to retain jurisdiction in the District Court and 

in this case, the Water Court, with power to revise the 

judgment at any time before the entry of final judgment 

adjudicating all of the claims therein involved. In those 

cases where the court determines that there is no just reason 

for delay and that its determination is in effect and fact 

final, the court may permit an appeal by granting a Rule 

54 (b) certificate. 
In discussing the use and purpose of Rule 54 (b) in its 

federal version, the United States Supreme Court said in 

Sears, Roebuck and Company v. Nackey (1956), 351 U.S. 427, 

In this form, it does not relax the finality 

required of each decision, as an individual claim, 

to render it appealable, but it does provide a 

practical means of permitting an appeal to be taken 

from one or more final decisions on individual 

claims, in multiple claims actions, without waiting 

for final decisions to be rendered on all the 

claims in the case. The amended rule does not 

apply to a single claim action nor to multiple 

claims actions in which all of the claims have been 

finally decided. It is limited expressly to 

multiple claims actions in which "one or more but 

less than all" of the multiple claims have been 

finally decided or are therefore otherwise ready 

for appeal. (Emphasis in original.) 

351 U.S. at 435, 76 S.Ct. at 899, 100 L.Ed at 1306. 

In the federal system, as in Montana's, an appeal is 

permitted from a district court to the United States Court of 

Appeals only from a final order or judgment. 28 U.S.C. § 

1291. In Sears, Roebuck and Company, supra, the Supreme 

Court decided that under a Rule 54(b) certificate a 

preliminary order became a final judgment within the meaning 

of § 1291. That Court stated: 

. . . The District Court cannot in the exercise of 

its discretion treat as "final" that which is not 

final within the meaning of 5 1291. But the 

District Court may by the exercise of its 

discretion of the interest of sound judicial 

administration, release for appeal final decisions 

upon one or more, but less than all claims of 

multiple claims actions. The timing of such a 

release is, with good reason, vested by the rule 

primarily in the discretion of the District Court 

as the one most likely to be familiar with the case 

and with any justifiable reasons for delay. With 

equally good reason, any abuse of that discretion 

remains reviewable by the court of appeals. 
Rule 54 (b), in its amended form, is a comparable 

exercise of the rulemaking authority of this Court. 

It does not supersede any statute controlling 

appellate jurisdiction. It scrupulously recognizes 

the statutory requirement of a "final decision" 

under § 1291 as a basic requirement for an appeal 

to the court of appeals. It merely administers 

that requirement in a practical manner in multiple 

claims actions and does so by rule instead of by 

judicial decision. By its negative effect it 

operates to restrict in a valid manner the number 

of appeals in multiple claims actions. 

Me reach a like conclusion as to the validity of 

the amended rule where the District Court acts 

affirmatively and thus assists in properly timing 

the release of final decisions in multiple claims 

actions. The amended rule adapts the single 

judicial unit theory so that it better meets the 

needs of judicial administration. Just as Rule 

54 (b) in its original form resulted in the release 

of some decisions in claims in multiple claims 

actions before they would otherwise be released, so 

amended Rule 54 (b) now makes possible the release 

of more of such decisions subject to judicial 

supervision. The amended rule preserves historic 

federal policy against piecemeal appeals in many 

cases more effectively than did the original rule. 

(Emphasis in original.) 

351 U.S. at 437-438, 76 S.Ct. 900-901, 100 L.Ed. 1307. 

The objectives of Rule 54(b) which were approved by the 

United States Supreme Court in Sears, Roebuck, are the same 

objectives of Rule 54(b) of the Montana Rules and are 

similarly approved by us. In Water Court adjudications, 

therefore, in proper cases, the Water Court may exercise its 

jurisdiction to determine to release for appeal certain of 

its interlocutory orders or decrees by issuing a Rule 54 (b) 

certificate. 

We must regard the provisions of 5 85-2-235, MCA, 

providing only for appeals from a final decree as an 
expression of state policy against piecemeal appeals. It 

follows that Rule 54 (b) orders should not be entered 

routinely or as a courtesy or accommodation to counsel. 

Panichella v. Pennsylvania Railroad Company (3d Cir. 1958), 

252 F.2d 452, 455. On the other hand, the "harsh case" test 

is neither workable nor entirely reliable as a benchmark for 

appellate review as noted by the Supreme Court in 

Curtiss-Wright Corporation v. General Electric Company 

(1980), 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1. As that 

Court stated, "because the number of possible situations is 

large, we are reluctant either to fix or sanction narrow 

guidelines for the [water] courts to follow." 446 U.S. at 

10-11, 100 S.Ct. at 1466. 

In the status of the present cases before this Court, 

where no Rule 54 (b) certificates were sought or granted, we 

hold that we have no jurisdiction to hear these appeals. We 

therefore dismiss each of these appeals and remand the causes 

to the Water Court, but without prejudice to the respective 

parties seeking Rule 54(b) certificates, a matter we leave to 

the reasonable discretion of the Water Courts. 

Dismissed. No costs to any party. Let remittitur 

issue forthwith. 

Justice 

We Concur: 
sitting for Mr. Justice 

Fred J. Weber, who was 

unable to sit