IN THE SUPREME COURT OF THE STATE OF MONTANA 

r 

IN THE MATTER OF THE ADJUDICATION OF THE 

EXISTING RIGHTS TO THE USE OF ALL THE WAT 

BOTH SURFACE AND UNDERGROUND WITHIN THE C 

FORK RIVER DRAINAGE AREA ABOVE THE BLACKFOOT JUL2 1992 

RIVER, INCLUDING ALL TRIBUTARIES OF THE CLARK 

FORK RIVER ABOVE THE BLACKFOOT RIVER IN DEFF zd sg$titk LODGE, GRANITE, LEWIS & CLARK, MISSOULA, POEM SUPREME COURT 

AND SILVER BOW COUNTIES, MONTANA. STATE OF FAONTANA 

APPEAL FROM: The Water Courts of the State of Montana, 

The Honorable Leif B. rickso on, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

M. K. Daniels, Attorney at Law, Deer Lodge, Montana 

For Respondent : 

DavidL. Pengelly, Knight, Maclay & Masar, Missoula, 

Montana 

Filed: 

Submitted on Briefs: May 21, 1992 

Decided: July 2, 1992 
Justice Karla M. Gray delivered the Opinion of the Court. 

This appeal arises from an order of the Water Court. The 

Water Court found that co-appellant City of Deer Lodge, predecessor 

in interest to co-appellants Evered and Ramona McQueary, abandoned 

through nonuse two water right claims in Cottonwood Creek, a 

tributary of the Clark Fork River. The Water Court ordered that 

the two water right claims shall not appear in the Preliminary or 

Final Decrees of the Clark Fork River Basin above the Blackfoot 

River (Basin 76G). We affirm. 

The issue on appeal is whether the Water Court erred in 

finding that Deer Lodge abandoned the two water rights in 

Cottonwood Creek. 

Pursuant to the statewide adjudication of existing water 

rights, Deer Lodge filed two claims for municipal use of water out 

of Cottonwood Creek. The claims are identified as 76G-W-010397-00 

and 76G-W-010398-00 and were obtained by Deer Lodge from a private 

water company in 1934. Upon the issuance of a Temporary 

Preliminary Decree for the Clark Fork River Basin above the 

Blackfoot River (Basin 76G) in 1985, respondents William J. 

Applegate and Sharon Applegate filed objections to both claims on 

the basis that the claims had been abandoned by Deer Lodge. 

In 1989, before the Water Court ruled on the Applegates' 

objections, Deer Lodge sold its interest in the two water rights to 

Evered and Ramona McQueary and filed a water right transfer 

certificate relating to those rights with the Montana Department of 

Natural Resources and Conservation. The Department acknowledged 

2 
the transfers on March 21, 1990, subject to the ongoing 

adjudication of the water rights. 

A Water Master conducted a hearing on the Applegatest 

objections to the claims on October 3, 1990. At the hearing, the 

Applegates presented evidence that Deer Lodge had not used either 

of the two water rights for any municipal purposes, the beneficial 

use for which the rights were claimed, since the late 1940s. The 

period of nonuse was shown to be in excess of twenty-three years as 

of July 1, 1973. Deer Lodge presented testimony through the Deer 

Lodge City Clerk that the two water rights had been carried as 

assets on the city books during the time period between the late 

1940s and July 1, 1973. The Clerk also testified that the 

diversion and conveyance works formerly associated with the water 

rights were no longer carried as assets on the city books. 

Deer Lodge also offered into evidence three engineering 

reports relating, in part, to feasibility studies of the city's use 

of the Cottonwood Creek water rights. Each report was prepared 

after July 1, 1973. The reports were admitted for the limited 

purpose of demonstrating Deer Lodge's lack of intent to abandon the 

water rights after July 1, 1973. 

Following the hearing, Deer Lodge requested that the record be 

reopened to allow it to introduce additional evidence. It sought 

to introduce supplemental exhibits identified as C-18, C-19 and C20. Each exhibit related to a city-owned right-of-way easement 

across the Applegates' property for a water pipeline. The Water 

Master denied Deer Lodge's request to supplement the record and, 
thereafter, entered his report on November 30, 1990. 

The Water Master found that the relevant time frame for 

determining whether Deer Lodge abandoned the two water rights was 

the period prior to July 1, 1973; thus, the post-1973 engineering 

reports were found to be unpersuasive as evidence of a pre-July 1, 

1973 lack of intent to abandon the water rights. He further found 

that Deer Lodge had abandoned both claims through nonuse over a 

period of time in excess of twenty-three years. Deer Lodge 

objected to the Water Master's report and requested a hearing 

before the Water Court. 

The Water Court heard oral argument on Deer Lodge's objections 

on April 12, 1991. Following the hearing, the Water Court issued 

its findings of fact, conclusions of law and decree. It denied 

Deer Lodge's request to supplement the record with exhibits C-18, 

C-19 and C-20 and adopted the Water Master's findings regarding 

Deer Lodge's abandonment of the two water rights. The Water Court 

ordered that water right claims 76G-W-010397-00 and 76G-W-010398-00 

shall not appear on the Preliminary and Final Decrees of the Clark 

Fork River Basin above the Blackfoot River (Basin 76G). This 

appeal followed. 

Did the Water Court err in finding that Deer Lodge abandoned 

the two water rights in Cottonwood Creek? 

The abandonment of a water right is a question of fact. 

Section 89-802, RCM (applicable here, repealed in 1973); 79 Ranch, 

Inc. v. Pitsch (1983), 204 Mont. 426, 431, 666 P.2d 215, 217. The 

standard of review of judge-made findings of fact is whether the 
findings are clearly erroneous. Dennis v. Tomahawk Services, Inc. 

(1989), 235 Mont. 378, 767 P.2d 346. This Court recently adopted 

a three-part test to determine if a finding is clearly erroneous. 

First, the Court will review the record to see if the 

findings are supported by substantial evidence. Second, 

if the findings are supported by substantial evidence we 

will determine if the trial court has misapprehended the 

effect of evidence. [Citations omitted.] Third, if 

substantial evidence exists and the effect of the 

evidence has not been misapprehended, the Court may still 

find that "[A] finding is 'clearly erroneous' when, 

although there is evidence to support it, a review of the 

record leaves the court with the definite and firm 

conviction that a mistake has been committed." [Citation 

omitted. ] 

Interstate Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 323, 

It is a fundamental principle in Montana that appropriation of 

water is based on its beneficial use; when the owner of the water 

right abandons or ceases to use the water for its beneficial use, 

the right ceases. 79 Ranch, 204 Mont. at 431, 666 P.2d at 217. 

This controlling policy of beneficial use was explained long ago in 

Power v. Switzer (1898), 21 Mont. 523, 529, 55 P. 32, 35, as quoted 

by this Court in 79 Ranch: 

It has been a mistaken idea in the minds of many, not 

familiar with the controlling principles applicable to 

the use of water in arid sections, that he who has 

diverted, or "claimed" and filed a claim of, water for 

any number of given inches, has thereby acquired a valid 

right, good as against all subsequent persons. But, as 

the settlement of the country has advanced, the great 

value of the use of water has become more and more 

apparent. Legislation and judicial exposition have, 

accordingly, proceeded with increasing caution to 

restrict appropriations to spheres of usefulness and 

beneficial purposes. As a result, the law, crystallized 

in statutory form, is that an appropriation of a right 

to the use of running water flowing in the creeks must be 

for some useful or beneficial purpose, and when the 
appropriator, or his successor in interest, abandons and 

ceases to use the water for such purpose, the right 

ceases. [Citation omitted.] 

Two elements are necessary for the abandonment of a water 

right: nonuse of the water associated with the water right and 

intent to abandon the water right. Shammel v. Vogl (1964), 144 

Mont. 354, 396 P.2d 103; Thomas v. Ball (1923), 66 Mont. 161, 213 

P. 597. We stated in 79 Ranch that evidence of a long period of 

continuous nonuse of a water right raises a rebuttable presumption 

of an intent to abandon that right and shifts the burden of proof 

to the nonuser to explain the reasons for nonuse. 79 Ranch, 204 

Mont. at 432-33, 666 P.2d at 218. To rebut the presumption of 

abandonment, there must be established some fact or condition 

excusing the long period of nonuse, not mere expressions of hope or 

desire reflecting a "gleam-in-the-eye philosophyM regarding future 

use of the water. 79 Ranch, 204 Mont. at 433-34, 666 P.2d at 218- 

19 (citing authorities). 

The case at bar presents a factual situation similar to that 

in 79 Ranch. The Applegates presented uncontradicted evidence that 

Deer Lodge had not used the two water rights since it ceased using 

Cottonwood Creek water for municipal purposes in the late 1940s. 

This showing of twenty-three plus years of continuous nonuse raised 

a rebuttable presumption that Deer Lodge had abandoned the water 

rights. 

The burden of proof then shifted to Deer Lodge to rebut the 

presumption of abandonment. The only relevant evidence offered by 

Deer Lodge was that it continued to carry the water rights as 
assets on its books during the period of nonuse. It presented no 

evidence that it had made any efforts to make use of the water 

rights between the late 1940s and July 1, 1973. It presented no 

evidence that it had maintained its diversion and conveyance 

facilities; in fact, it indicated that those facilities were no 

longer carried as assets on its books. 

Deer Lodge's evidence that it carried the water rights as 

assets on its books is not sufficient to rebut the presumption of 

abandonment. It does not meet the requirement in 79 Ranch of 

explaining the reasons or excuse for long periods of nonuse. 

Indeed, Deer Lodge's evidence, by itself, reflects nothing more 

than a "gleam-in-the-eye philosophyw regarding future use of the 

water which, as stated in 79 Ranch, "is not consistent with the 

protection and preservation of existing water rights." 79 Ranch, 

204 Mont. at 434, 666 P.2d at 219. To find otherwise would be 

inconsistent with the "[f]undamental policy that a water right does 

not mean possession of a quantity of water, but its beneficial 

use." 79 Ranch, 204 Mont. at 433, 666 P.2d at 218 (emphasis in 

original). 

Deer Lodge suggests that it was caught by surprise and was 

"blindsidedr' by the Water Court's finding that the pre-July 1, 1973 

time frame was controlling in determining the abandonment question 

and the court's corresponding finding that the post-1973 

engineering reports were not persuasive in showing a lack of intent 

to abandon. It states that it assumed that its burden was to show 

a lack of intent to abandon the water rights by post-July 1, 1973 
evidence and, thus, it "[mlade no effort to obtain evidence that 

may have been available during the period from the late 1940's to 

July 1, 1973." 

We find no error on the part of the Water Court in refusing to 

consider Deer Lodge's post-1973 engineering reports as persuasive 

evidence. The Montana Water Use Act was enacted during the 1973 

legislative session and became effective on July 1, 1973. The Act 

defined an "existing right" as "[a] right to the use of water which 

would be protected under the law prior to July 1, 1973.11 Section 

89-867(4), RCM (now 5 85-2-102(9), MCA). In 1979, upon passage of 

the general statewide Water Adjudication Act, the legislature 

directed the adjudication of all "existing" water rights and 

specifically identifiedthose rights as those in existence prior to 

July 1, 1973. Section 85-2-212, MCA. Thus, the clear purpose of 

statewide adjudication is to adjudicate water rights as they 

existed on July 1, 1973. Given this background, the Water Court 

correctly determined that only the pre-July 1, 1973 time frame was 

relevant on the abandonment question and evidence relating to 

intent to abandon which reflected Deer Lodge's post-1973 actions 

was not persuasive. 

Deer Lodge also asserts that the Water Court should have 

considered its post-hearing evidence regarding its continued 

protection of an easement for a pipeline across the Applegatest 

property as evidence of a lack of intent to abandon the water 

rights. We conclude that the Water Court in this case correctly 

refused to consider this evidence. Montana law has long recognized 
that water rights and easements or ditch rights are separate and 

distinct rights. McDonnell v. Huffine (1912), 44 Mont. 411, 422- 

23, 120 P. 792, 795; Missoula Light & Water Co. v. Hughes (1938), 

106 Mont. 355, 365, 77 P.2d 1041, 1046; Mildenberger v. Galbraith 

(1991), 249 Mont. 161, 166, 815 P.2d 130, 134. Because water 

rights and easements are separate and distinct legal rights, one 

can be abandoned without abandoning the other. McDonnell, 44 Mont. 

at 423, 120 P. at 795. While in other cases such evidence may be 

admissible, evidence of Deer Lodge's continued protection of its 

easement was irrelevant to the issue of whether it abandoned its 

water rights. 

We conclude that the Water Court's finding that Deer Lodge 

abandoned its claims to the two water rights in Cottonwood Creek is 

supported by substantial evidence. Further, in accordance with our 

three-part test in Interstate Prod. Credit Ass'n, we determine that 

the court did not misapprehend the effect of the evidence. 

Finally, after a review of the record, we are not left with a 

definite and firm conviction that a mistake has been committed. 

Accordingly, we hold that the Water Court's finding that Deer Lodge 

abandoned the water rights is not clearly erroneous and, thus, we 

will not disturb the court's ruling. 

Affirmed. 
We concur: 
July 2, 1992 

CERTIFICATE OF SERViCE 

I hereby certify that the following order was sent by United States mail, prepaid, to the following 

named: 

M. K. DANIELS 

Attorney at Law 

P.O. Box 670 

Deer Lodge, MT 59722 

David L. Pengelly 

KNIGHT, MACLAY & MASAR 

P.O. Box 8957 

Missoula, MT 59807-8957 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA