No. 80-465 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

MANUEL CASTILLO, JR., and DEBORAH J. 

CASTILLO, and GARRY A. COTANT, SHARYL 

COTANT, 

Plaintiffs and Appellants, 

VS. 

DELBERT B. KUNNEMANN, 

Defendant and Respondent. 

Appeal from: District Court of the Sixth Judicial District, 

In and for the County of Park 

Honorable Jack D. Shanstrom, Judge presiding. 

Counsel of Record: 

For Appellants: 

Berg, Coil, Stokes & Tollefsen, Eozernan, Montana 

Ben E. Berg, Jr. argued, Bozeman, Montana 

For Respondent: 

Loble and Pauly, Helena, Montana 

Lester Loble I1 argued, Helena, Montana 

Wellcome and Frost, Bozeman, Montana 

A1 Frost argued, Bozeman, Montana 

Swandal, Douglass & Swandal, Livingston, Montana 

For Amicus Curiae: 

Donald D. MacIntyre, D.N.R., Helena, Montana 

Submitted: November 30, 1981 

Decided: Hht 3 f4$2 

File NAP, 3 - 1982 . 
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of 

the Court. 

Appellants, Manuel and Deborah Castillo and Garry and 

Sharyl Cotant, appeal from an order of the Sixth Judicial 

District Court, Park County, entered on October 8, 1980. 

The order denied appellants' request for an injunction 

preventing respondent, Delbert Kunnemann from diverting 

certain water. On September 29, 1981, this Court issued an 

opinion reversing the District Court, holding in favor of 

appellants Castillo and Cotant. A petition for rehearing 

was duly filed. We reverse our original position and, with 

modification, affirm the District Court. 

In 1976, Delbert Kunnemann owned a 1,275-acre ranch 

located in the Shields Valley, Park County, Montana. Kunnemann 

owned two water rights on the Shields River from which he 

drew water to irrigate his ranch. Kunnemann's water rights 

stemmed from an appropriation of 240 miner's inches made by 

a Thirza Grannis on June 1, 1880, and from an appropriation 

of 450 miner's inches made by a John McNiven on August 14, 

1893. Two main ditches, named after the respective original 

water rights appropriators, Grannis and McNiven, were used 

to transport the water from the Shields River to Kunnemann's 

property. 

On December 30, 1976, Kunnemann sold a 230-acre parcel 

of his ranch to Jake Franks. The warranty deed conveying 

this parcel to Franks contained the following water right 

grant: 

"Together with 230 miner's inches of the 

waters of the Shields River appropriated 

by John McNiven and bearing appropriation 

date of the 14th day of August, 1893, and 

related ditch rights." 
Jack Franks subdivided the 230-acre parcel into twelve 

smaller tracts of land. The Castillos purchased a 20-acre 

tract from Franks on March 4, 1977. The contract for deed 

between Franks and Castillos did not contain a specific 

water right grant but rather the following general grant: 

"Together with the tenements, hereditaments and appurtenances 

thereunto belonging." The Cotants purchased a 9.114-acre 

tract from Franks on November 8, 1979. The warranty deed 

given by Franks to the Cotants contained this language: 

"Together with all and singular the tenements, hereditaments, 

appurtenances, water rights and water ditches, if any, 

thereunto belonging." 

The following diagram depicts the location of the 

property retained by Delbert Kunnemann, the Franks subdivision, 

the Castillo and Cotant properties, and the Grannis and 

McNiven ditches: (See Drawing on Next Page) 
Kunnemann 

Property 
No interconnecting lateral ditches exist between the 

~c~iven ditch and the Castillo and Cotant properties. When 

Jake Franks sold the subdivision tracts between the McNiven 

ditch and the Castillo and Cotant properties, he did not 

reserve any easements through which lateral ditches could be 

built to transport water from the McNiven ditch to the 

Castillo and Cotant properties. 

During the 1977 and 1978 irrigating seasons, Kunnemann 

allowed Castillo to take water from the Grannis ditch to 

irrigate hay crops. In 1980, Kunnemann blocked the Grannis 

ditch north of the Castillo property, thus diverting all of 

the water flowing in the Grannis ditch onto Kunnemannls 

land. 

As a result of Kunnemannls diversion of the Grannis 

ditch, Castillos and Cotants filed a complaint on July 14, 

1980. They sought to enjoin Kunnemann from interfering with 

the flow of water in the Grannis ditch. 

The District Court entered a restraining order on July 

22, 1980, preventing Kunnemann from diverting the Grannis 

ditch water. A show cause hearing on the complaint was set 

for August 5, 1980. 

On August 5, 1980, the plaintiffs, Castillos and Cotants, 

and the defendant, Kunnemann, appeared with counsel and 

presented testimony. Following hearing, the District Court 

issued findings of fact and conclusions of law on September 

9, 1980. 

The District Court found that the Castillos, Cotants 

and their predecessor in interest, Jake Franks, never had 

possession of the Grannis ditch or Grannis water rights. 

The court found that Jack Franks could not convey the ~rannis 
ditch or water rights as appurtenant to the Castillo or 

Cotant property because such rights had never been legally 

attached as appurtenant. The court further found that 

section 85-2-403, MCA, imposes no duty on the seller of real 

property and appurtenant water rights to file a notice of 

such sale or transfer with the Department of Natural Resources. 

Based on these findings the District Court dissolved the 

restraining order granted pending the order to show cause 

and denied the plaintiffs' motion for an injunction. 

On September 18, 1980, Castillos and Cotants filed a 

motion to amend pursuant to Rule 59 (g) , M.R.Civ.P. On 

October 8, 1980, the District Court entered an order denying 

the motion. Castillos and Cotants appeal from this order. 

Dispositive issues in this case are: 

1. When Kunnemann deeded to Franks and expressly 

granted the McNiven rights, did Kunnemann impliedly reserve 

the Grannis rights? 

2. If Kunnemann effectively reserved the Grannis 

rights and severed them from the land to which they had been 

appurtenant, did existing law require him to obtain approval 

of the Department of Natural Resources pursuant to the 

provisions of the Montana Surface and Groundwater Act, 

sections 85-2-101, et seq., MCA? 

3. What effect does failure to apply to the Department 

of Natural Resources for permission to sever have upon a 

conveyance? 

Plaintiffs introduced a decree entered by the Sixth 

Judicial District Court in civil case no. 2717, Henwood v. 

Hobson, which adjudicated water rights of Thirza Grannis on 

the Shields River. This decree determined that the appropriation 

of 240 miner's inches made by Thirza Grannis on June 1, 
1880, was appurtenant to the following land: "The South 

half of Section Nine, also all of Section Seventeen, Township 

One South, Range Ten East." The tract of land which Castillo 

purchased from the Franks' subdivision lies in the south 

half of this particular section nine. 

Additionally, Kunnemann testified that the land which 

Castillo ultimately purchased had traditionally been irrigated 

by water from the Grannis ditch. This testimony was confirmed 

by Dan Dinsdale, son of the predecessor in interest of 

Delbert Kunnemann, and by Albert Palmer, a hired hand who 

had irrigated the property. Both men stated that only water 

from the Grannis ditch had been used to irrigate the land 

which Castillo subsequently purchased. 

In Lensing v. Day and Hansen Security Co. (1923), 67 

Mont. 382, 384, 215 P. 999, 1000, this Court stated that ". 

. . a water right acquired by appropriation, and used for a 

beneficial and necessary purpose in connection with a given 

tract of land, is an appurtenance. . ." Section 70-17- 

101(11), MCA, establishes that ditches are an easement which 

may attach to land. Section 70-15-105, MCA, provides that a 

". . . thing is deemed to be incidental or appurtenant to 

land when it is by right used with the land for its benefit 

. . ." It is clear that both by decree and beneficial use, 

the Grannis water - and ditch rights were appurtenant to 

Castillo's land. 

However, evidence concerning whether the Grannis water 

and ditch rights were appurtenant to the Cotant property is 

not so clear. No decree was admitted which declared such 

rights appurtenant to the Cotant property. Kunnemann did 

testify that he used the Grannis ditch and Grannis water to 

irrigate the lands south of the Castillo property. Cotants 
purchased a 9.114-acre tract of land which borders the 

Castillo property immediately on the south. An aerial photo 

of the area showed that the Grannis ditch runs directly 

through the Cotant property. Due to the proximity of the 

Cotant property to that owned by Castillos, the evidence 

supports a finding that the Cotant property would have been 

irrigated at the same time the Castillo property was irrigated. 

We find the Grannis rights to be appurtenant to both tracts. 

Kunnemann conveyed the McNiven water right together 

with related ditch rights. We hold that related ditch 

rights refer to the "McNiven ditch." Since Kunnemann held 

two water and ditch rights, namely the Grannis rights and the 

McNiven rights, the question becomes whether conveyance of 

the McNiven rights impliedly reserved the Grannis rights. We 

now hold that such an implied reservation was effectuated by 

the conveyance in question. 

Section 28-3-702, MCA, provides as follows: 

"All things that in law or usage are considered as incidental to a contract or as necessary 

to carry it into effect are implied therefrom 

unless some of them are expressly mentioned 

therein, in which case all other things of 

the same class are considered to be excluded." 

Under the provisions of the above-quoted statute, the 

water right not specifically mentioned would be excluded. 

Furthermore, such an interpretation effectuates the intent 

of the parties. In Lensing v. Day and Hansen Security Co., 

supra, this court said at pp. 384-385: 

"In a conveyance of a water right or any other 

property, it is the intention of the parties, 

so far as the same has been lawfully expressed, 

which must control the courts in a construction 

of the instrument by which the property is conveyed. The general rules of construction of 

legal documents apply to the instrument now 

under consideration. The fact that a water 

right is involved does not add to or in any 

way change those rules." 
~pplying well established rules of construction, and 

the provisions of section 28-3-702, MCA, quoted above, we 

now hold that respondent Kunnemann effectively reserved his 

Grannis water right and the related Grannis ditch right. 

The next issue for resolution is whether the Montana 

Surface and Groundwater Act, sections 85-2-101, et seq., 

MCA, applies to water rights perfected prior to the effective 

date of the Act. Ditch rights are clearly not governed by 

the applicable statutes. The Act is comprehensive legislation 

designed to ". . . provide for the administration, control, 

and regulation of water rights and establish a system of 

centralized records of - all water rights." Section 85-2- 

101 (2) , MCA, (emphasis added) . Under this Act, an adjudication process of all water rights existing prior to July 1, 

1973 was instituted. Sections 85-2-211 through 85-2-243, 

MCA. Additionally, appropriations of water rights after 

July 1, 1973 could only be made through an application and 

permit procedure governed by the Department of Natural 

Resources and Conservation. Sections 85-2-301 through 85-2- 

317, MCA. 

Prior to 1973, Montana case law consistently held that 

a water right could be transferred and disposed of apart 

from the land to which it was appurtenant. However, such 

transfer could not adversely affect other vested rights. 

See Sherlock v. Greaves (1938), 106 Mont. 206, 76 P.2d 87; 

Lensing v. Day and Hansen Security Co., supra. 

The Surface and Groundwater Act made such transfer 

subject to review as follows: 

" (3) Without obtaining prior approval from 

the department, an appropriator may -- not 

sever -- all or =part --- of an appropriation 

right ---- from the land to which -- it is appurten- 

- ant, . . . The department shall approve the 
proposed change if it determines that the 

proposed change will not adversely affect 

the rights of other persons. If the department determines that the proposed change 

might adversely affect the rights of other 

persons, notice of the proposed change shall 

be given in accordance with 85-2-307. If 

the department then determines that an objection filed by a person whose rights may be 

affected states a valid objection to the proposed change, the department shall hold a 

hearing thereon prior to its approval or denial of the proposed change. Objections shall 

meet the requirements of 85-2-308 (2) and hearings shall be held in accordance with 85-2-309." 

Section 85-2-403, MCA. (emphasis added.) 

Respondent contends that this provision was not intended 

to govern water rights perfected before the July 1, 1973, 

effective date. However, section 85-2-403(3) does not 

contain specific language which precludes its application to 

water rights perfected prior to July 1, 1973. Other provisions 

contained in the Surface and Groundwater Act - do contain such 

preclusive language. For example, section 85-2-404, MCA, 

regarding abandonment of water rights states: 

"(1) If an appropriator ceases to use a11 

or a part of his appropriation right with 

the intention of wholly or partially abandoning the right or if he ceases using his 

appropriation right according to its terms 

and conditions with the intention of not 

complying with those terms and conditions, 

the appropriation right shall, to that extent, be deemed considered abandoned and 

shall immediately expire. 

"(2) If an appropriator ceases to use all 

or part of his appropriation right or ceases 

using his appropriation right according to 

its terms and conditions for a period of 10 

successive years and there was water available for his use, there shall be a prima 

facie presumption that the appropriator has 

abandoned his right in whole or for the part 

not used. 

"(3) This section -- does not apply to existing rights until --- they have been determined 

in accordance with part - 2 of - - this chapter." 

(emphasis added.) 

It is clear that the legislature precluded application of 

the Surface and Groundwater Act statutes where it deemed 
such action necessary. Accordingly, it was the legislature's 

apparent intent not to preclude application of section 85-2- 

403(3), MCA, to water rights existing prior to July 1, 1973, 

by virtue of the fact that language precluding such application 

was not included in the statute. 

On rehearing, Kunnemann contends that application of 

section 85-2-403(3), MCA, of the Surface and Groundwater Act 

to water rights perfected before the Act would violate the 

Montana Constitution. Article IX, Section 3, provides: 

" (1) All existing rights to the use of any 

waters for any useful or beneficial purpose 

are hereby recognized and confirmed." 

The subject provision of the Act does not destroy the 

right to use water, thus violating the constitutional provision. 

Rather, the Act establishes a procedure for review. The 

Department of Natural Resources, under the Act, can only 

deny transfer if other vested rights would be injured. The 

law has not been changed. The Department has simply been 

given a review to determine the same issue that could previously 

have been determined only by a District Court. 

In commenting upon the new provision, Montana's noted 

water law authority, Albert Stone said: 

"The 1973 Water -- Use Act, R.C.M., section 89- 

892, continues the policy of the repealed 

section 89-803, only adding that any change 

must have the approval of the Department of 

Natural Resources and Conservation. So the 

case law developed under the prior code section should remain applicable to the new section." Selected Aspects of Montana Water Law, 

p. 40. 

We see nothing unconstitutional about applying the 

mandated procedure to rights perfected prior to the effective 

date of the Act. Therefore, we hold that the owner of a 

water right existing prior to July 1, 1973, must seek the 

approval of the Department of Natural Resources and Conservation 
before severing that right from land to which it is appurtenant. 

The result of our determination involving the first two 

issues is, that ownership of the Grannis water right and 

ditch right was reserved by respondent Kunnemann. However, 

the water right has remained appurtenant to the land conveyed 

by Kunnemann to Franks and so the right reserved is qualified. 

Kunnemann must apply to the Department of Natural Resources 

for permission to sever from the land conveyed, the water 

right which Kunnemann owns. 

The same rationale applies to the McNiven water right. 

The conveyance passed title, but the right to use will be 

delayed until appropriate approval is granted by the Department 

of Natural Resources. 

The result of this opinion is to hold that: (1) the 

Montana Surface and Groundwater Act, except where it indicates 

a contrary intent, applies to water rights perfected prior 

to the effective date of the Act, and (2) failure to comply 

with the terms of the Act does not render a conveyance or 

reservation void, but suspends ability to use the right 

until the statutorily mandated permission is granted by the 

Department of Natural Resources. 

Judgment in favor of Kunn d. 

We Concur: 
Justices John C. Sheehy and Fred J. Weber dissenting in 

part: 

We agree with the resolution of the first issue by 

the majority, that Kunnemann impliedly reserved his 

Grannis water right and conveyed no right to Franks or 

his successors to take irrigation water onto the deeded 

lands through the Grannis ditch as it runs through the nondeeded property retained by Kunnemann. 

We disagree with the conclusion of the majority that 

approval of the Department of Natural Resources is necessary 

to effectuate the transfer by Kunnemann to Franks or that 

any right to Kunnemann to use the remaining water is "severed" 

and must have Department of Natural Resources approval. 

A review of basic Montana water law is useful to demonstrate our position. 

We begin with a reminder that a water right and a 

ditch right are separate entities, capable of separate 

ownership. Kunnemann can own a ditch right without a 

mw-ky 

water right, or a water right without a ditch right. BWS~~Fv. Missoula Irr. District (1931), 90 Mont. 344, P.2d 

; Connolly v. Harrel (1936), 102 Mont. 295, 57 P.2d 781; 

McDonnell v. Huffine (1931), 44 Mont. 411, 120 P.2d 792. In 

this case, Kunnemann sold to Franks that part of the Grannis 

ditch that was part and parcel of the decided property. He 

reserved to himself the Grannis water right which provided 

water to that portion of the Grannis ditch. He had a perfect 

legal right to do so, since Kunnemann can own a water right 

without a ditch right. 

Before the deed to Franks, Kunnemann, of course, owned 

all of the real property involved here. He owned a water 

right to 240 miner's inches in the Grannis ditch and 450 

miner's inches in the McNiven ditch. The ditches on his 
lands were part and parcel of his ownership. The ditches 

were not "appurtenant" because they were part of the 

real estate that Kunnemann owned. This was explained in 

Smith v. Denniff (1900), 24 Mont. 21, 23, 24, P. 

as follows: 

"2. Section 1078 of the Civil Code defines 

an 'appurtenance' as follows: 'A thing is 

deemed to be incidental or appurtenant to land 

when it is by right used with the land for 

its benefit, as in the case of a way, or water 

course, or of a passage for light, air or heat 

from or across the land of another.' A 'water 

course from or across the land of another' is 

an easement, and by reference to section 1250 

of the Civil Code it is plain that in the 

contemplation of the Code an appurtenance to 

land is in any and every case an easement. For 

example: A. owns a parcel of land, to irrigate 

which he has lawfully appropriated and by 

right is using, water. The ditch through which 

the water is conveyed is also owned by him, and 

is partly upon his land and partly upon the land 

of B. The water right is an appurtenant to A.'s 

land, and that part of the ditch which is upon 

B.'s land is an easement of A. therein, and is 

also appurtenant to the land of A., but that part 

of the ditch which is upon A.'s land is not 

appurtenant thereto, but is part and parcel of 

the land itself." 

Hence, it is clear that the portion of the Grannis 

ditch that lies upon the lands sold to Franks is not 

"appurtenant" to that land, but is part and parcel of the 

land conveyed, Franks received no ditch right in the Grannis 

ditch as an "appurtenance," because Franks got no right to 

convey irrigation water over the remaining Kunnemann's land 

through the Grannis ditch on that land. A ditch right on 

the land of another is an easement on the land of the other, 

and an easement cannot be created, granted or transferred 

except by operation of law, by an instrument in writing, 

by prescription or eminent domain. 

The effect of the deed from Kunnemann to Franks was 

to convey to Franks 230 miner's inches of water in the 

McNiven ditch, and the right to take water to the deeded 

lands through the McNiven ditch over the remaining Kunnemann 
lands. By the deed, Franks received 230 miner's inches 

of McNiven water formerly owned by Kunnemann, and a NcNiven 

ditch right over the remaining Kunnemann lands as an 

appurtenance to the lands purchased by Franks. 

Castillo and Cotant are successors to a part of 

the rights deeded by Kunnemann to Franks. They have no 

other claim upon Kunnemann, or upon his remaining water or 

ditch rights. They cannot get water through the Grannis 

ditch unless they acquire (1) a water right which can be 

diverted at the Grannis diversion, and (2) an easement over 

Kunnemann's remaining lands to carry the water through the 

Grannis ditch over Kunnemann's remaining lands to the lands 

owned by Cotant and Castillo. 

A further result of the deed to Franks by Kunnemann 

is that Franks got that portion of the Grannis ditch which 

was located upon the deeded lands, but no water right because 

the Grannis water right was reserved to Kunnemann. When 

Castillo and Cotant claimed water through the Grannis ditch, 

they were claiming water for which neither they nor their 

mu lac! 

predecessor Franks had a water right. See ?4e4%kq-13. Missoula 

Irr. District, supra, for a reverse of this situation. 

Castillo and Cotant have no water right in the Grannis ditch 

which is appurtenant to the lands they now own. 

Kunnemann owned "existing rights," that is water and 

ditch rights which existed prior to July 1, 1973. We disagree 

that the owner of an existing right may not transfer a water 

or ditch right unless the Department of Natural Resources 

approves. In arriving at the opposite conclusion, the 

majority rely upon a portion of section 85-2-403, MCA, which 

we again quote for the reader's convenience. 
" (1) The right to use water under a permit 

or certificate of water right shall pass 

with a conveyance of the land or transfer 

by operation of law, unless specifically 

exempted therefrom. All transfers of interest 

and appropriation rights shall be without loss 

of priority. 

"(2) The person receiving the appropriation 

interest shall file with the Department notice 

of the transfer on a form prescribed by the 

Department. 

"(3) Without obtaining prior approval from the 

Department, an appropriator may not sever all 

or any part of an appropriation right . . ." 

We contend that the foregoing statute applies only 

to water rights received under a permit or a certificate of 

authority. It was not intended to apply to existing rights, 

especially since existing rights were confirmed by 1972 

Montana Constitution, Art. IX, § 3. The anomaly of the 

majority relying on section 85-2-403, MCA is that the majority 

hold in this case directly opposite to the provisions of 

section 85-2-403(1). Under that subsection no implied 

reservations are recognized. If that subsection applied 

Kunnemann's rights to water from the Grannis ditch would have 

passed by the deed to Franks because they were not "specifically 

exempted therefrom. " 

We are buttressed in our contention that section 

85-2-403 does not apply to existing rights because in the 

same part of the code, in section 85-2-401, MCA, it is provided 

that priority of appropriations for existing rights are to 

be determined by water courts. 

Prior to July 1, 1973, an owner of a water right could 

change the place of diversion, or place of use of his water 

right, except only to the extent he may injure others by 

such change. Section 89-803, R.C.M. 1947. These incidents 

of ownership of water rights were confirmed by 1972 Montana 
Constitution, Art. IX, § 3, or the constitutional 

provision has no meaning. The majority takes away these 

incidents unless the Department of Natural Resources gives 

approval. Not only has the majority misconceived the intent 

of the constitutional provision and the statutes adopted 

thereafter, but they have placed in doubt the rights of 

hundreds of water users in this state who have conveyed 

or received conveyances of existing rights since July 1, 

1973. Such a result is not necessary here, especially 

since the process of adjudicating all water claims is now 

in full swing before the water courts, when and where all 

rights to the use and ownership of water will be determined. 

Under our view of the law here, there is no conflict 

with the state constitution, and we need not discuss such 

an issue. 

We would affirm the District Court in -- toto,